Company Difficulties  >  Creditors Voluntary Liquidation "CVL"

This arises when the company is unable to continue trading because it is unable to pay its debts as they fall due.

The directors of the company convene a meeting of shareholders and creditors. At the meeting of shareholders, the shareholders pass a special resolution that the company cannot continue trading in view of its financial position and that a licensed insolvency practitioner should be appointed as liquidator.

The first meeting of creditors is held and at such time, the shareholders’ liquidator’s appointment can be ratified or alternatively, the creditors can, if they wish, replace the liquidator appointed by the shareholders with one of their own choice. The key differences between this process and a court liquidation is that a CVL avoids the requirement/cost to present a petition to court and a company director must chair the first meeting of creditors.

As with court liquidation, a liquidation committee can be elected in order to assist the liquidator in discharging his duties.

The liquidator is responsible for realising the company’s assets and distributing the net proceeds to creditors in accordance with their legal ranking.

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