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Background When a company is insolvent, the directors have a duty to protect creditors interests and to take restructuring advice, and this more often result in the company being wound up via a Creditors voluntary Liquidation (CVL). One of the primary duties of an appointed liquidator is the realisation of the company assets, and in this regard the maximisation of funds proceeds on behalf of the creditors, for whom there may be a dividend, payable in order of strict legal

Whereas CVLs (creditors voluntary liquidation) deal with insolvent companies, MVL (members voluntary liquidation) winding ups are in relation to the winding up of solvent companies. Some of the regular queries we receive are as follows: Does a solicitor have to be involved in the winding up process? No, since the Companies Act 2014, the winding up can be effected by Summary Approval Procedure, a more streamlined process (S579). In practice, the directors will sign the Declara

The creditors meeting takes place at a place and time as advertised in the statutory notices (10 days notice by post to creditors and advertised in 2 daily newspapers) and is chaired by one of the directors who may be assisted by an accountant or legal advisor. The purpose of the meeting is: · To lay before the meeting a Statement of Affairs of the company. · To ratify the nominated liquidator or to give the creditors an opportunity to appoint their own preferred

Directors Duties when a company is facing Insolvency 1) Introduction The definition of insolvency has two elements, negative net assets and the ability to pay debts as they fall due. Given the fact that many viable companies may have, and for various reasons, negative net assets, the true test is more often the liquidity or cashflow test – with common indicators being a judgment action / a creditor statutory demand or sheriff notice. In these circumstances directors have

When a company is facing insolvency, it can be a difficult and stressful time for directors. Nonetheless, it is important that the...