Pre-Liquidation Guidance
Licensed Insolvency Practitioners
Independent advice for directors
Clear explanations without jargon
We help you explore all closure options – including Creditors’ Voluntary Liquidation (CVL), Members’ Voluntary Liquidation (MVL), and strike-offs – explaining the practical and legal differences between them.
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Pre-Liquidation Guidance
What is a Creditors' Voluntary Liquidation (CVL)?
Creditors’ Voluntary Liquidation (CVL) is a formal insolvency procedure used to close a company that can no longer pay its debts as they fall due, and is initiated by the directors with shareholder approval.
A licensed insolvency practitioner is appointed to oversee asset sales, with the proceeds distributed to creditors in a legally defined order, often not paying all debts in full.
This process helps directors address financial distress responsibly while closing the business in an orderly fashion. CVL marks the end of the company’s existence and the formal closure of its financial affairs.
What is a Members’ Voluntary Liquidation (MVL)?
Members’ Voluntary Liquidation (MVL) is a process chosen when a solvent company no longer wishes to trade and is able to pay all debts within 12 months.
Directors must make a formal declaration of solvency before appointing a licensed liquidator to settle debts and distribute leftover assets to shareholders.
MVL is commonly used for strategic reasons, such as retirement or restructuring, and allows shareholders to extract profits in a tax-efficient way.
This route offers an orderly means for owners to wind down a healthy company while maximising returns for stakeholders.
What is a Company Strike-Off?
A company strike-off, also called dissolution, is the act of removing a company from the official Companies House register, effectively ceasing its legal existence.
Strike-offs can be voluntary, initiated by directors when the company is no longer needed, dormant, or hasn’t traded for at least three months.
Or they can be compulsory, instigated by Companies House when statutory filings aren’t completed.
Unlike liquidation, strike-offs do not involve selling assets to pay creditors; any remaining assets after dissolution are transferred to the Crown.
Strike-off is usually a cost-effective option for closing solvent businesses with no outstanding debts, but legal risks remain for unresolved liabilities.