Insolvent Liquidation

Creditors Voluntary Liquidation ("CVL")

This occurs where the shareholders, usually at the directors' request, decide to put a company into liquidation because it is insolvent. Either the company cannot pay its debts as they fall due or it has more liabilities than assets.

The purpose of the liquidation is to appoint a responsible person who has a duty to collect the company's assets and distribute them to its creditors in accordance with the law. That person is the liquidator who must be a licensed insolvency practitioner.

Compulsory Liquidation

A compulsory liquidation is usually where a creditor has petitioned the Court for the winding up of the company. The official receiver becomes the liquidator but normally appoints an insolvency practitioner to carry out the liquidation. This is also known as a 'compulsory winding up'.

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