Creditors' Voluntary Liquidation
A Creditors' Voluntary Liquidation occurs when the company passes a special resolution at a general meeting to say that it cannot continue in business because of its liabilities and that it is advisable to wind up. The resolution must be advertised in the Gazette within 14 days of the general meeting and a copy of it must be sent to Companies House within 15 days. A Creditors' Voluntary Liquidation can also occur if a company enters into members' voluntary liquidation and the liquidator considers that the company will not be able to pay its debts in full within the period stated in the directors' statutory declaration of solvency. In such a case, a meeting of creditors must be held within 28 days and the members' voluntary liquidation becomes a Creditors' Voluntary Liquidation from the date of that meeting.
A meeting of creditors must be held in the next 14 days after passing the resolution. Notice of the meeting must be sent to the creditors at least 7 days before the meeting. The meeting must be advertised in the Gazette and in two newspapers in the area where the company has its principal place of business. Also, the directors must prepare a statement of affairs for consideration at the meeting, and appoint one of themselves to attend and preside over the meeting.
When the liquidator is appointed, the directors must provide him or her with a statement of affairs and otherwise co-operate with the liquidator.
The liquidator is appointed to wind up the company's affairs. The liquidator does this by calling in all the company's assets and distributing them to its creditors. If anything is left over, the liquidator distributes it among the members of the company. Within 14 days of being appointed, a liquidator must publish a notice of appointment in the Gazette and notify the Registrar. The liquidator must also give notice in a newspaper in the area where the company has its principal place of business. The liquidator must send a statement of affairs and Form 4.20 to Companies House within 7 days of the creditors' meeting. The liquidator must also send a statement, in duplicate, of receipts and payments for the first 12 months of liquidation. After that, statements must be sent every 6 months until the winding-up is complete.
The liquidator presents an account to final meetings of both the creditors and shareholders of the company. He or she must advertise the meetings in the Gazette at least one month before. Within one week of the meeting having taken place, the liquidator must send the account to Companies House and a return of the final meeting. Unless the court makes an order deferring the dissolution of the company, it is dissolved 3 months after the return and account are registered at Companies House.