Creditors’ Voluntary Liquidation (CVL)
If your company is struggling to meet its financial commitments and recovery no longer seems achievable, entering a Creditors’ Voluntary Liquidation (CVL) can bring much-needed clarity and direction. This process provides a structured and fair way to bring closure to a company. It also protects directors, respects creditors and gives everyone involved the certainty they need to move forward.
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What is a Creditors' Voluntary Liquidation?
A CVL is a structured process that helps a company close its affairs when it can no longer pay its debts or faces imminent insolvency, without the need for court involvement.
The process begins when shareholders agree to appoint a Registered Liquidator, who then takes care of the company’s assets, resolves outstanding matters, and distributes funds to creditors.
For directors, a CVL offers relief from ongoing financial pressures, helps prevent further debt and provides a responsible path to step back and start fresh.
When should a company consider CVL?
CVL is often the right choice when a business can no longer realistically recover — whether due to ongoing cash flow problems, loss of key clients or simply the natural end of operations. Directors can use this process to manage their responsibilities, protect against personal liability and close the business with professionalism and compliance.
In short, CVL is about concluding operations with control and peace of mind, rather than letting financial pressures dictate the outcome.
The Creditors Voluntary Liquidation Process
The CVL process usually takes at least six months, depending on the company’s complexity. It’s a clear, step-by-step approach designed to ensure fairness and transparency:
- Shareholder Resolution: Members formally agree to wind up the business and appoint a Registered Liquidator.
- Taking Control: The Liquidator steps in to take control of the company, review records and identify assets.
- Asset Collection: Company assets are gathered, sold and proceeds distributed to creditors following legislative priorities.
- Keeping Creditors Informed: Creditors are notified, invited to lodge claims and updated throughout the process. The Liquidator also lodges a report on their investigations with ASIC.
- Protecting Employees: Employee wages, superannuation and leave entitlements are prioritised, with government assistance available via the Fair Entitlements Guarantee (FEG) scheme if funds are insufficient.
- Final Steps: Once distributions and reporting are complete, the Liquidator lodges a final report to ASIC triggering deregistration of the company.
The Role of a Liquidator
The Liquidator is an independent professional who ensures the process is fair and compliant. They manage assets, investigate the affairs of the company, report to creditors and ASIC and make sure everything is concluded properly.
Are there any alternatives to liquidation?
If the business has potential to recover, options like Small Business Restructuring or Voluntary Administration may allow the company to continue trading while reorganising debts and operations. These alternatives can provide breathing space to rebuild without fully closing the business.
Why Choose HM Advisory
Our approach combines local insight, technical expertise and genuine care, helping business owners navigate liquidation with confidence.
- Proven Expertise: Decades of guiding companies through CVLs across Australia.
- Supportive Guidance: Clear, professional advice at every stage to reduce stress.
- Fair and Transparent: Respectful treatment of directors, creditors and employees.
- Efficient Resolution: Structured process delivering timely, compliant outcomes.
- People First Approach: Understanding the personal impact of financial challenges and helping you move forward with clarity.
We are here to help
If a business you’re involved with may require our CVL services, please feel free to contact us for an initial consultation – this is free of charge and without obligation.
Victoria
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Melbourne VIC 3000
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Western Australia
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East Perth WA 6892
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Queensland
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New South Wales
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Sydney NSW 2000
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Queen Victoria Building NSW 1230
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FAQs
What role do creditors play in a CVL?
Creditors are notified of appointment, can request meetings, and ask questions about the liquidation process. While this might feel overwhelming, HM Advisory ensures they are kept informed in an orderly way, helping balance their interests with your responsibilities as a director.
How does a CVL protect directors and stakeholders?
By starting a CVL proactively, directors show responsible decision-making, limiting personal liability for insolvent trading. Creditors are treated fairly, and the company’s remaining assets are managed transparently. HM Advisory guides directors step-by-step, reducing stress and helping you make the right choices for all involved.
What’s the difference between a Creditors Voluntary Liquidation (CVL) and a Members Voluntary Liquidation (MVL)?
A CVL is used when a company cannot pay its debts and needs to close responsibly. An MVL applies when a company is solvent, but the directors or shareholders decide to close it. HM Advisory guides both processes with care and clarity.
How does Voluntary Administration differ from a liquidation (CVL or MVL)?
Voluntary Administration is a rescue-focused process, giving a company breathing space to restructure, negotiate with creditors and potentially continue trading via a DOCA. Liquidation, by contrast, is the formal closure of a business. With HM Advisory, you can explore all options to save your company before taking the final step to liquidation.