Our team at Cork Gully has extensive experience of both forms of insolvent liquidation and can assist clients both before and during an insolvent liquidation process. Insolvent liquidation is the most common outcome for a company that’s insolvent and has no prospect of continuing to trade without adversely affecting the interests of creditors.
Creditors’ Voluntary Liquidation (CVL)
A company enters Creditors Voluntary Liquidation (CVL) by consensual agreement of the directors, shareholders and, ultimately, creditors. Our team at Cork Gully will assess and advise on the options available to the company and its directors, given its financial position. Should a CVL be the most appropriate solution we will advise the company of the legal and statutory requirements and ensure that all of the necessary documentary and procedural steps are carried out correctly.
Advising the Company and its Board
The process for commencing a CVL begins with a meeting of the Board of directors at which it’s agreed to convene a general meeting of shareholders, to resolve to place the company into voluntary liquidation and appoint a liquidator. After this meeting, creditors have the opportunity to nominate a liquidator in place of the liquidator appointed by the shareholders. There are two ways creditors can nominate a liquidator; either by deemed consent or a virtual meeting. A physical meeting can be convened provided it’s requisitioned before the decision is made as to who is to be liquidator.
Our team will offer the highest professional standards of service to the company through this process, bearing in mind the likely sensitivities of the situation. Cork Gully will assist the company’s directors to prepare a statement of affairs and additional explanatory information to support the statement of affairs, which will include preparing a company history, detailing the reasons for the company’s failure, a summary of its financial position and an explanation of the deficiency to the creditors.
Appointment as Liquidator
Our partners and directors can accept appointments as liquidator at a shareholders’ meeting or, if creditors wish to replace a liquidator chosen by shareholders, we can be appointed as liquidator by the creditors.
Alternatively, if a CVL liquidator is already in office and creditors wish to replace them, Cork Gully can advise creditors on their options which include seeking a decision of creditors to appoint a replacement liquidator. Our insolvency practitioners at Cork Gully can replace the previous liquidator(s).
Compulsory liquidation is a court driven process to wind up a company on the petition of a creditor, the company, its directors, or, very rarely, a shareholder.
Cork Gully can advise all stakeholders in evaluating their options and considering whether they wish to petition for the winding up of a company.
Appointment as Liquidator
After the winding-up order is made by the court, an insolvency practitioner at Cork Gully can accept an appointment as liquidator:
- by a seeking a decision of creditors convened by the Official Receiver to appoint a liquidator; or
- by being appointed by the Secretary of State, which will usually occur in cases where a majority creditor wishes to see a liquidator appointed but where the Official Receiver is reluctant to seek a decision of creditors; or
- if creditors are unhappy with the existing liquidator of the company, they can request that a qualifying decision procedure is instigated where creditors can choose a replacement liquidator.
In some circumstances there may be an urgent need to appoint a provisional liquidator to protect the Company’s assets where they may be in jeopardy or under dispute. Our insolvency practitioners at Cork Gully can also act as provisional liquidator in these urgent situations.
Once appointed as liquidators in either a CVL or Compulsory Liquidation, Cork Gully will:
- Evaluate and seek to pursue claims for fraudulent trading, wrongful trading, undervalue transactions, preference transactions, and unpaid capital, in order to enhance returns to creditors; and
- Deal with the company’s assets by realising them and making distributions to secured, preferential and unsecured creditors.