Liquidation
There are essentially three types of liquidation: Company
Voluntary Liquidation (CVL), Members’ Voluntary Liquidation (MVL) and Compulsory Liquidation.

Where directors believe their company to be insolvent, with little prospect of recovery, they may consider placing the company into CVL to mitigate any potential action against them for wrongful trading. The liquidator will take responsibility for realising the assets for distribution amongst the creditors by way of a dividend.

Where a company has come to the end of its natural life, or the directors need to reorganise a company as part of a group structure, a MVL will most likely be the natural process to achieve this. Protection is given against creditor claims in the short term, normally 12 months, to allow the appointed Liquidator to realise assets in an orderly fashion and pay all creditors in full.

Compulsory Liquidation follows an Order form the Court following a petition presented to it, in most cases by a creditor of the company.