Liquidation (sometimes known as
‘winding up’) is the most common type
of company insolvency and, with very few exceptions,
spells the end of a company as it is usually
wound up and any assets realised and distributed.
There are three types of liquidation;
Compulsory Liquidation –
This is for insolvent companies. The Court
makes an Order to wind up the company following
a petition being presented by a creditor or
other appropriate party.
Creditors Voluntary Liquidation
(CVL) – Also for insolvent companies.
A company is placed into CVL following its shareholders
passing a special resolution to place it into
liquidation.
Members Voluntary Liquidation
(MVL) – This is used by solvent
companies that need to be wound up in an orderly
manner. It is often used to wind up companies
within a larger group, possibly as a result
of a restructuring process.
The Liquidator’s role in
a liquidation is to realise the assets of the
company and distribute any available funds to
creditors (and then, in the case of MVLs, the
shareholders).
In the instances of Compuslory
Liquidation or CVL, the liquidator is required
to prepare and submit a report on the Directors’
conduct, in accordance with Company Directors
Disqualification Act legislation, to the Department
for Business, Enterprise and Regulatory Reform
(BERR).
We can advise you on what to
expect in the event of the liquidation of your
company and tell you what to expect for the company
and its directors and shareholders.
