The CVL is the most dignified and preferred way for the directors of a company to deal with the insolvency. The law prohibits wrongful trading when a company is insolvent, and directors could risk being found personally liable if they do not take action at an early stage. Directors should consult a Licensed Insolvency Practitioner for advice on their position.

Once a meeting of creditors has been held to confirm the appointment of the Licensed Insolvency Practitioner as the Liquidator of the company, the directors will be required to cooperate with all reasonable requests made by the Liquidator.

The Directors of a company will usually have a preliminary meeting with a Licensed Insolvency Practitioner, at this meeting the financial position of the company will be discussed and the options that are available to either rescue the company or to initiate the Liquidation procedure.

Once the directors are ready start the Liquidation process a board meeting will be held in order to resolve that the company be placed into Liquidation. Two meetings are then required to be convened, a Shareholders’ meeting which passes the resolution to wind up the company and nominate a Liquidator, the other meeting is a Creditors' meeting.

Between the board meeting and the Shareholders and Creditors' meeting, the director(s) shall furnish the nominated Liquidator with all information required so that a statement of affairs and directors' report can be compiled. The nominated Liquidator will usually instruct agents to collect and safeguard any assets that may be at risk.

The Shareholders’ meeting requires to be convened by giving at least 14 clear days’ written notice (subject to any contrary provisions in the articles of the company). This meeting can be held at short notice as long as 90% of members are available to sign a consent to short notice. At this meeting only 2 resolutions are required, the first one is to wind up the company and the other is to appoint a Liquidator.

Once the resolutions have been passed to liquidate the company and appoint a Liquidator the directors must within 7 days send a statement of the company’s affairs to the Creditors. Whether the company has nominated a Liquidator or not, the Creditors must be invited to nominate a Liquidator. This is done by the deemed consent procedure or a virtual meeting (or in limited circumstances a physical meeting), which must take place within 14 days after the decision to wind up the company has been taken. The statement of affairs must be sent to Creditors at least one day before the Creditors’ decision on the appointment of a Liquidator. The Liquidator will be the person nominated by the Creditors, but if different Liquidators are nominated by the company and Creditors then any director, shareholder or creditor can apply to the court for the company’s nominee to be appointed, for both to be appointed or for someone other than the Creditors’ nominee to be appointed.

The Creditors may decide to create a liquidation committee which must have a minimum of 3 members and no more than 5. The purpose of such a committee is to assist the Liquidator in discharging their functions.

On the appointment of a Liquidator all the powers of the directors will cease.

The duties of the Liquidator once appointed will be to investigate into any matters arising from the Creditors’ meeting, conduct an investigation in accordance with Statement of Insolvency Practice 2, submit a report to the Secretary of State for Business Energy and Industrial Strategy on the conduct of directors, take any action arising from the investigation, realise all of the assets of the company, agree Creditors’ claims, make distributions to Creditors and report to Creditors on a minimum of an annual basis whereby an account of the Liquidation will be given.

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