A creditors’ voluntary liquidation (also known as a CVL) is an insolvency process that occurs when the company’s members determine that the company is insolvent, or likely to become insolvent and can no longer satisfy its debts. A creditors’ voluntary liquidation allows for the winding up of a company’s affairs without the need for Court intervention. This type of insolvency provides for an orderly realisation and distribution of a company’s assets among its creditors and investigations as to why the company failed.
A creditors’ voluntary liquidation can occur at the end of a voluntary administration if creditors vote for a company to be liquidated or a deed of company arrangement (DOCA) has been terminated. It may also occur when an insolvent company’s shareholders agree to liquidate the company and appoint a liquidator.
Recovery actions by the ATO and Directors’ Penalty Notices (DPNs) can place pressure on company directors leading to a Creditor’s Voluntary Liquidation. The initiation of a Creditors Voluntary Liquidation could also occur when directors of a company become at risk of insolvent trading.
Once all assets have been realised, investigations are completed and distributions to creditors are made, the liquidator will apply to ASIC to deregister the company. Creditors no longer have any claim against the company
SV Partners work with accountants, legal advisors, financial institutions, other related professionals and their clients to achieve the best possible solution for all stakeholders involved throughout an insolvency process. Our role as Liquidators in the creditors’ voluntary liquidation process is to act as the independent third party to ensure the process is conducted appropriately and according to the relevant law. Our highly qualified team have worked throughout various industries and have an extensive knowledge of business and the impact on stakeholders when a company faces financial distress.
For more information about Creditors’ Voluntary Administrations, visit our FAQ section or alternatively to speak confidentially to an expert that can assess your situation, call 1800 246 801.