Author Nick: ashlynnhenry
The liquidation process may vary depending on the type of liquidation procedure that the company is undertaking. If a company is liquidating voluntarily, then it will either undertake a Members Voluntary Liquidation (MVL) or a Creditors Voluntary Liquidation (CVL). If a company is given a winding up order by a court, then it is liquidated compulsorily.
Liquidation can be a difficult process for some companies. How companies deal with liquidation can depend on how severe the company’s financial difficulties are and what other problems the company may have. Once a company enters liquidation, the company directors no longer have control of the business, which can be demoralising for some.
In contrast to Compulsory Liquidation, which is initiated through a court order, Voluntary Liquidation is, as the name implies, undertaken voluntarily. Either the shareholders of a company initiate voluntary proceedings or the company directors undertake them. The legal formalities differ in each case, but in either case, the services of a licensed insolvency professional will be employed.
Company voluntary arrangements (CVA’s) are legally binding agreements between companies and their creditors that outline in detail a plan for settling outstanding debts. The advantage of such an arrangement is that it is a way by which company directors can remain at the helm of their company and steer it away from liquidation proceedings.
