What winding up procedures are available to a company/ its directors?

What is a winding up procedure?

When a company is wound up its business legally comes to an end and a liquidator is appointed to take control.
There are two ways in which a company can voluntarily wind itself up. These are known as Creditors Voluntary Liquidation (‘CVL’) or Members Voluntary Liquidation (‘MVL’).

What is CVL?

Creditors Voluntary Liquidation sees the directors (not the creditors) voluntarily put their insolvent company in to liquidation, rather than be forced to do so by the Court/ as a result of their creditors. The directors will appoint an insolvency practitioner to help put the company into CVL. It’s the most common form of liquidation and is usually a way of achieving the best outcome for the company creditors, whilst also enabling the directors to prepare for a new business.

What is MVL?

When a director wants to bring a solvent company to a close, Members Voluntary Liquidation is the most common way of doing so. All creditors will be paid in full and the surplus is distributed to the shareholders. The directors will have to swear a legal document demonstrating that the company can pay its debts in full. The shareholders then control the appointment of the liquidator in the liquidation, not the creditors.

If you would like some advice on liquidating your company, please contact our insolvency team on 029 2082 9100 for a free initial consultation.