Creditors’ voluntary liquidation (CVL) meaning

This Checklist outlines the position in relation to a creditors’ voluntary liquidation (CVL) with effect from 6 April 2017. Notifications The appointed liquidator must provide the registrar of companies with the following: a copy of the statement of affairs, to be delivered within five business days after the conclusion of the decision procedure or deemed consent procedure relating to the liquidator’s appointment a copy of the notice of appointment of liquidator, to be sent within 14 days of the appointment The registrar of companies should be notified using Form 600CH. If the liquidator chooses to move the company’s registered office to their business address, they should also submit to the registrar of companies a copy confirming the change of registered office (if this has not already been filed). In February 2014, Companies House issued guidance answering frequently asked questions about insolvency filings at Companies House (most recently updated on 10 March 2022). The guidance contains a list of the...

The circumstances in which an incumbent office-holder needs to resign from their appointment are: ill-health retiring as, or stopping practice as, a licensed insolvency practitioner (IP) a conflict of interest, or a shift in personal circumstances, that prevents or renders impracticable the continued performance of duties Examples include curtailment or withdrawal of the IP’s licence to act, the IP changing firm with appointments not transferring, or alternative arrangements being put in place for those appointments. This Checklist should be read alongside the Checklist on the block transfer of office-holder appointments: Procedure for block transfers of office-holder appointments—checklist, as a block transfer order can often be the speediest and most economical means of addressing the situation. Further guidance appears in the Practice Note: Block transfer orders—the law and practice. An office-holder can also be displaced by creditors, which may need to be factored in. For more detail, see: Removal of an office-holder—checklist. While the various insolvency regimes share broadly...

Bhundia v Dhar [2025] EWHC 1227 (Ch) What are the practical implications of this case? The judgment underscores the standard expected of chairs of creditors’ meetings when assessing proofs of debt. A finding of material irregularity showed the original liquidator’s appointment was defective: Mr Bhundia’s proof was not admitted to vote for the correct amount, and Mr Dhar’s vote was accepted when it should not have been. Accordingly, those presiding as chair (including directors or insolvency practitioners) must verify all claims, since their determinations are vulnerable to the court forming its own conclusion on the balance of probabilities if a challenge is brought. Errors can unravel the outcome of the meeting, requiring a fresh decision procedure. Secondly, the decision clarifies the limited finality of construction adjudication awards in an insolvency setting. The court firmly rejected Mr Dhar’s reliance on res judicata and merger, concluding that an adjudicator’s award is not final and does not extinguish other, separate claims (such as overpayments or items not supplied) arising under the...

In this issue: Corporate insolvency process Personal insolvency Document review Restructuring Directors and insolvency Creditor participation Employees and insolvency Partnership insolvency International restructuring and insolvency Daily and weekly news alerts New content New Q&As Corporate insolvency process Contested debt and shift from members’ voluntary liquidation to creditors’ voluntary liquidation (Noal SCSp v Novalpina Capital LLP (in members voluntary liquidation)) This ruling makes clear that where a company in members’ voluntary liquidation (MVL) cannot satisfy all liabilities in full, together with interest at the official rate, within the timeframe specified in the directors’ declaration under section 89 of the Insolvency Act 1986 (IA 1986), it must move into creditors’ voluntary liquidation (CVL). There is no solvency assessment available to alter that timeframe. As the entity is already in liquidation, the liquidator lacks any discretion and is required, by IA 1986, s 95, to effect the conversion from MVL to CVL....

What are the practical implications of this case? When proposing an MVL, directors must ensure their advisers receive every pertinent detail. If a liability is overlooked or contested, the MVL will almost inevitably have to switch to a CVL unless that sum is settled in full within 12 months, or any shorter timeframe set out in the directors’ declaration. The liquidator has no latitude to prolong this window. Under IA 1986, s 95, the liquidator is under a duty to effect conversion from MVL to CVL within seven days of concluding that the 12‑month cut-off (or any shorter period specified by the director(s)) will not be achieved. Once an MVL is underway, creditors of the company gain the advantage in any dispute because the 12‑month MVL deadline cannot be lengthened. Directors should also note that disputed sums are treated no differently for these purposes, and failure to meet the declared timetable compels conversion. There is no scope for any extension. Parties contemplating an MVL would be well...

The resolution to wind-up A company can move into voluntary liquidation only if one of the following applies: its fixed duration has ended, or an event specified in its articles as triggering liquidation has occurred, and the company has approved an ordinary resolution to wind up; or it passes a special resolution to be wound up voluntarily. See: 97 Notice of meeting to pass ordinary or special resolution to wind up: Encyclopaedia of Forms and Precedents [1441] 103 Special resolution to wind up and appoint liquidator: Encyclopaedia of Forms and Precedents [1452] The former practice of proceeding by extraordinary resolution is no longer available under the Companies Act 2006. Where the directors make a declaration of solvency under section 89 of the Insolvency Act 1986 (IA 1986), the company may proceed by way of a members’ voluntary liquidation (MVL). For further information, see Practice Note: What is a members’ voluntary liquidation and when is...

This note sets out how a Limited Liability Partnership (LLP) may enter creditors’ voluntary liquidation (CVL), describes the scope of the liquidator’s authority, and explains the duties of the members. It does not extend to Limited Partnerships; for guidance on those, see Practice Note: Limited partnerships and insolvency—key principles. Applicable legislation The Limited Liability Partnerships Act 2000 (LLPA 2000) introduced LLPs and should be read together with the Limited Liability Partnerships Regulations 2001 (LLPR 2001), SI 2001/1090. Under the LLPR 2001, the Insolvency Act 1986 (IA 1986) and the Insolvency (England and Wales) Rules 2016 (IR 2016), SI 2016/1024, are applied to LLPs. The IA 1986 applies solely to LLPs registered in Great Britain...

This Practice Note provides an overview of the key points and core practical considerations related to a members’ voluntary liquidation (MVL) from a dispute resolution perspective. What is a MVL? An MVL is the procedure through which a company, by a resolution of its members, resolves to wind up its affairs and proceed towards ultimate dissolution. During this process, a licensed insolvency practitioner, authorised by a recognised professional body, must be appointed to act as liquidator of the company. An MVL is ordinarily used where a solvent company has fulfilled its purpose and the members no longer wish to maintain it as a corporate entity. It is likewise employed when members wish to realise their investment in a solvent company. For further reading, see Practice Note: What is a members’ voluntary liquidation and when is it typically used? If the company is insolvent, a different route must be followed, such as a creditors’ voluntary liquidation (CVL) or compulsory liquidation...

Where a company opts for a voluntary winding up, proceedings do not pause automatically; however, the court still holds broad discretion to halt any actions already on foot, as circumstances require. Under section 112 of the Insolvency Act 1986 (IA 1986), the liquidator, or any contributory or creditor, can seek an order inviting the court to wield any power it could use in a compulsory winding up, including staying proceedings in appropriate circumstances on proper application accordingly. If the company moves into Creditors’ Voluntary Liquidation (CVL), the court may throw out any pending winding up petition and issue whatever order it considers appropriate (IA 1986, s 125)...

Q&A The Q&A indicates that a company in administration is nearing the first anniversary of that appointment. At that juncture, the administration will automatically come to an end pursuant to paragraph 76(1) of Schedule B1 to the Insolvency Act 1986 (IA 1986), although it can be extended by the court, or with the consent of creditors, for up to a further year under IA 1986, Sch B1, para 76(2). The question makes no reference to whether all assets have been realised, but the administrator is actively pursuing office-holder claims, for instance a transaction at an undervalue under IA 1986, s 238, or a preference under IA 1986, s 239. There is no explicit information about the prospect of a dividend to unsecured creditors; however, the fact that such office-holder claims are being pursued suggests that a distribution remains a reasonable possibility. Consequently, there is still meaningful work to complete in relation to the insolvent company. An administrator may pay a dividend to unsecured creditors, but only where the distribution...

For the purposes of this Q&A We proceed on the basis that the director plans to take over all, or virtually all, of the business of company 1 when company 1 enters a creditors’ voluntary liquidation (CVL). Under section 216 of the Insolvency Act 1986 (IA 1986), once a company goes into liquidation, anyone who was a director or shadow director of that company in the 12 months before liquidation is, for five years from the liquidation date, prohibited from acting as a director of a company with the same or a similar name to the company that has gone into liquidation (a prohibited name), or from otherwise taking part in the formation or management of a company with the same or a similar name. A person who breaches IA 1986, s 216 may face a fine, imprisonment, or both. There are exceptions to these restrictions in IA 1986, s 216. A director of a company in liquidation can act as a director of a company that uses a...