What is Creditors’ Voluntary Liquidation (CVL)?

Creditors’ Voluntary Liquidation (CVL) is the most common liquidation process for insolvent companies in the UK. It is initiated by directors when they recognise the business cannot pay its debts and has no realistic prospect of recovery. Directors convene a meeting of shareholders and creditors to pass resolutions placing the company into liquidation and appointing a licensed insolvency practitioner as liquidator. The liquidator’s role is to sell company assets, investigate the conduct of directors, and distribute proceeds to creditors according to the statutory order of priority. CVL demonstrates that directors are acting responsibly by acknowledging insolvency and taking formal steps to close the company. It also gives creditors confidence that the process will be handled fairly. Unlike compulsory liquidation, CVL gives directors more control over the timing and choice of liquidator, which can help protect their reputation and reduce stress. Once complete, the company is struck off the register at Companies House.