Tuesday, September 11, 2012
What Is A Company Voluntary Liquidation?
pre pack liquidation. It is often also known as creditors voluntary liquidation or even CVL, as it involves the creditors, at a meeting, voting that the company can go directly into liquidation.
It can be seen that the CVL is the end of a business, and indeed it is often known as a burial process. But , in fact , the closing of one business is an chance to save a business whilst shutting down a loss performing shell and starting a new going issue.
It is quite a common event for a pre-pack sale on the business to be considered if possible. It has the effect of preserving assets and jobs which, in the light of this country's current economic problems, will be important. Directors will continue to be able to draw their own salary and shareholders will continue to be able to reap the benefits of their dividends without interruption through the entire transition period. Employees and suppliers, similarly, do not need to even notice that any change has happened in any way.
The process of a company voluntary liquidation is pretty straightforward. A statement of affairs is prepared and circulated to creditors. They may be invited to a meeting, where it will be proposed that the company is liquidated and a liquidator appointed. Notice of the meeting must be at the very least two weeks in advance. Very often these days, creditors simply do not show up, but they might send a proof of debt and a proxy voting form by post or fax prior to the conference itself.
Large creditors with great connections may be able to get a agent from a large accountancy firm to visit the conference. That so-called 'meeting man' will ask relevant questions of the directors as to the reasons why the business has been unsuccessful, but this is really all for effect, as the ending of the business is going to be, of necessity, a formality.
If the resources of the business are already pre-sold, an explanation of why will be given at the moment. The new business will rise from the ashes of the old and the riches and stability that stems from this particular continuity will be of benefit to everyone.
For more information: Finance7