Creditors Voluntary Liquidation
A voluntary liquidation is an alternative to a compulsory winding up order before the Court. A Creditors Voluntary Liquidation is generally reserved for insolvent companies.
A liquidation in practice brings the company to the end of its trading life, and involves the realisation of the company’s assets in order to pay stakeholders (primarily creditors) as much as possible.
Where a company is insolvent, the directors and shareholders can take steps to place a company into Creditors Voluntary Liquidation in order to bring the company to the end of its natural life. Directors ought not to continue trading, to avoid potential proceedings that may be brought by the Liquidator subsequently, beyond the point of any time when they knew or ought to have concluded that a company could not avoid an insolvent liquidation.
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