When appointed to conduct a Creditors’ Voluntary Liquidation (CVL) the insolvency practitioner works on behalf of the company’s creditors. A company is placed into insolvent liquidation because it cannot afford to repay its debts to various stakeholders – typically customers, suppliers, HMRC, and employees.
Securing a return for creditors
The appointed insolvency practitioner must ensure that creditors receive as high a return as possible from the liquidation. They do so by processing creditor claims, valuing and selling business assets, and then distributing the proceeds according to the statutory creditor hierarchy to repay company debts as far as possible during the liquidation process.
Winding up the business’s affairs
This involves overseeing financial and administrative requirements, such as closing down the payroll, processing redundancy claims, and submitting a strike-off request to Companies House.
Investigating the reason for insolvency
The IP’s role as investigator in a CVL entails identifying the reasons behind the company’s failure and looking for instances where director misconduct or negligence may have contributed to its downfall.