Liquidation is the process used to close a limited company.
There are two forms of liquidation: Creditors Voluntary Liquidation (CVL) and Members Voluntary Liquidation (MVL). The process required if a company is insolvent and unable to pay its creditors is Creditors Voluntary Liquidation.
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Normally the directors have come to the conclusion that the company must be closed because all other options including attracting additional investment in to the company or using an alternative rescue solution such as a company voluntary arrangement or pre-pack are simply not viable.
Although it is normally the directors who make the decision to close the company the solution is known as a creditors voluntary liquidation. This is because it is the creditors themselves who agree to the appointment of the liquidator who is then responsible for selling the company’s assets and carrying out all other matters concerning the closure.
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