Creditors' voluntary liquidation (CVL)
A liquidation initiated by the company's directors and shareholders when the company can't continue trading. Distinct from compulsory liquidation, which is ordered by a court.
A creditors' voluntary liquidation begins when the directors resolve that the company is insolvent and call a meeting of members and creditors. A licensed insolvency practitioner is appointed as liquidator. The liquidator's job is to realise the company's assets, agree creditors' claims (proofs of debt), distribute available funds in the statutory order, and dissolve the company. Section 216 of the Insolvency Act 1986 then restricts the directors from reusing the company's name in another business for five years unless a statutory exception applies.
