“Is a Creditors Voluntary Liquidation Right for our companies debt situation”

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If the company has insufficient cash flow to meets it debts as they fall due, it may well be insolvent. It is important that directors take this seriously as they are at personal risk if it is proved they traded the company “wrongfully”. Most of the time is it obvious that a company is insolvent, but if you want a simple test e mail us for our solvency calculator or give us a call.

Sometimes it’s simply a case of knowing when to accept defeat. For example it may be not possible to restructure the business and produce a viable enterprise, or the directors and shareholders may have just run out of steam. There’s no point continuing with the worry and stress of a failing business if there is little chance of turning things around. A CVL allows you to close the business down and move on with your life.

However, we would always recommend a formal review to consider if a business turnaround solution like a Company Voluntary Arrangement or even an informal time to pay arrangement it a better option than liquidation.

Remember a CVL is not the end of the business. Following an independent valuation of the assets of the business, the original owners, shareholders and directors are entitled to buy them. In fact, this often provides the best value and allows the enterprise to continue as a new limited company. This is not only legal but is often in the best interests of creditors and the wider economy. It protects jobs and gives the owners a second chance.

There are significant legal requirements in ensuring a CVL and business phoenix is successful and fully compliant with the insolvency law so again it is important to take advice.

Directors need to be aware that personal guarantees given to a bank, or a landlord, and overdrawn loan accounts will be a potential problem, again we believe in making the right business decision first and then managing by negotiation [which we do as part of our service] the fall out or problems. If you have personal guarantees or a directors overdrawn loan account or are not sure call us or further.

On the other hand, we know a failing company is a burden and that many people seek liquidation simply because they’ve had enough. We help take the pressure off so you can investigate all your options.

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