Insurances.net
insurances.net » Finance » What Happens With Creditors Voluntary Liquidation?
Finance Investing Loans Personal-Finance Taxes Loan quotes
]

What Happens With Creditors Voluntary Liquidation?

When the shareholders and/or directors of a company feel they can no longer service their debts

, they may decide to undertake Creditors Voluntary Liquidation (CVL). CVL is a complex and potentially time consuming undertaking and is not to be taken lightly, though it can be the best option for a company that feels it is no longer a viable business entity.

The first step in the procedure of Creditors Voluntary Liquidation is for the directors to call a board meeting and resolve that due to unsustainable debt liabilities, the company can no longer continue to trade. Then creditors and shareholder with attend a meetings to obtain a collective resolution to place the company into liquidation. A director, typically the Managing Director is chosen to chair the meeting with the creditors and shareholders.

The meeting with creditors must be convened within 15 days after the shareholders resolve to dissolve the company. Generally this meeting is held immediately after the shareholders?meeting. A resolution of 75% of the shareholders determines the appointment of a liquidator, but this appointment needs to be ratified at the creditor meeting.

At the creditors?meeting, creditors are given the opportunity to ask all parties involved in the Creditors Voluntary Liquidation process questions regarding all company affairs. After this, a liquidation committee is formed, consisting of at least 3 and no more than 5 creditors as well as company representatives (usually from the board of directors) to assist the liquidator. Often a committee cannot be formed, so resolutions are passed regarding confirmation of the liquidator, his or her remuneration, their selection of solicitors and other legal formalities. If a majority of creditors wish to, they can change the liquidator and an alternative must be decided upon to take control of the companys affairs.

Companies and persons considering Creditors Voluntary Liquidation should weigh the pros and cons of this procedure. Provided proper business procedure has been taken, the directors?are less likely to be faced with accusations of wrongful trading action. However, they will be subject to investigation by the appointed liquidator, who by law must disclose his findings to the Department of Trade & Industry.

The benefit of CVL to creditors is that they receive immediate recovery of the VAT element of their liability, though usually they also receive a poor dividend repayment.

Creditors Voluntary Liquidation is a very complex issue and cannot be comprehensively covered in a brief outline. If you are considering taking this step, consult an expert in the field and discuss your particular details with them before taking action.

by: Mike Simister
Traditional Christmas - No Longer Due To Finances Improving A Classic Momentum Indicator's Abiilty To Time Stock Entries Forex Charting: Using The Rsi Expand Your Finance With The International Trade Market Trading Japanese Candlesticks: The Tasuki Gap Pattern Healthcare Bill And Medicare Distinguishing Between Debt Consolidation And Debt Settlement Get Out Of Debt - How To Get Creditors To Stop Calling And Legitimately Forgive 60% Of Your Debt What Credit Card Companies Don't Want You To Know - Credit Card Debt Reduction Does A Debt Relief Program Make Financial Sense For You? - Important Debt Relief Advice How Federal Stimulus Money Has Impacted Debt Settlements - Settle Credit Card Debt How To Reduce Credit Card Balances With A Debt Settlement - Help With Credit Debt Why Having Over $10,000 In Credit Card Debt Could Play To Your Advantage - Debt Reduction
Write post print
www.insurances.net guest:  register | login | search IP(3.129.195.82) Michigan / Detroit Processed in 0.007733 second(s), 5 queries , Gzip enabled debug code: 14 , 2789, 385,
What Happens With Creditors Voluntary Liquidation? Detroit