Creditors’ Voluntary Liquidation is intended to avoid creditors from suffering further financial loss once a company enters insolvency, especially when the company owes substantial debt. It is an official procedure that ensures that the organisation is properly closed down, but it additionally shields company directors from charges of wrongful trading if the limited company goes out of business.

The liquidator realises all of the business’s assets and utilises the money to repay creditors to the greatest extent possible, aiming to clear as much debt as feasible. One important element of joining CVL is that directors may be eligible to receive statutory redundancy pay if they have worked under a contract of employment in addition to being directors, but this does not apply to the self-employed.