What is a creditors' voluntary liquidation?

It is the route gov.uk describes for a company that cannot pay its debts, where the directors propose winding it up, enough shareholders agree and an authorised insolvency practitioner is appointed as liquidator. The liquidator acts in the interest of the creditors rather than the directors.

How many shareholders must agree to a CVL?

gov.uk says shareholders holding 75% by value of the shares must agree to pass the winding-up resolution. The Insolvency Service says creditors must then be notified.

What happens to a director in a CVL?

The director no longer controls the company or anything it owns and cannot act for it. The director must give the liquidator the information it asks for, hand over the company's assets, records and paperwork and attend an interview if asked. gov.uk says a director can be banned for 2 to 15 years, or prosecuted, if the liquidator decides the director's conduct was unfit.

Can I use the same company name after a CVL?

gov.uk says a director of a company in a CVL or compulsory liquidation is banned for 5 years from forming, managing or promoting a business with the same or a similar name. The exceptions are a sale by a licensed insolvency practitioner who gives the legally required notice, the court's permission, and involvement with another company that has used the name for at least a year.

Creditors' voluntary liquidation: what directors need to know

Updated 4 November 2026 Sources UK company guides · How we make money

A creditors’ voluntary liquidation (CVL) is how directors close a company that cannot pay its debts. Shareholders holding 75% by value must agree, and an authorised insolvency practitioner takes over as liquidator, acting in the interest of the creditors. The directors then cannot act for the company and must hand over its assets, records and paperwork.

When a CVL applies

A company is insolvent when it cannot pay its debts on time or has more liabilities than assets on its balance sheet. The Insolvency Service says that does not always mean the company must stop trading, and it tells directors to get professional advice before they choose. Its options for a company that can continue include an informal agreement with creditors, a restructuring plan, a company voluntary arrangement, administration and a moratorium.

If there is no way to continue, liquidation is the option. gov.uk names three types: creditors’ voluntary liquidation, where the company cannot pay its debts and the creditors are involved, compulsory liquidation, where the company cannot pay and a court is asked to order it, and members’ voluntary liquidation, where the company can pay its debts. Our guide to closing a limited company compares all the routes, and the guide to members’ voluntary liquidation covers the solvent route.

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Steps and deadlines

Step	What happens	Deadline
1	The directors propose that the company stops trading and is wound up, and the shareholders vote. Shareholders holding 75% by value must agree to pass the winding-up resolution	At a shareholders’ meeting
2	The directors make out a statement of the company’s affairs and send it to the creditors	Within 7 days, counting from the day after the resolution
3	The company appoints an authorised insolvency practitioner as liquidator	After the resolution
4	The resolution goes to Companies House	Within 15 days
5	The resolution is advertised in the Gazette	Within 14 days

The Insolvency Service adds that creditors must be notified after the resolution. The statement of affairs shows the company’s assets, debts and liabilities, the creditors’ names and addresses and any security they hold, and some or all of the directors verify it with a statement of truth. Directors who fail to comply without reasonable excuse commit an offence under section 99 of the Insolvency Act 1986 and are liable to a fine. You need an insolvency practitioner to do this, and the gov.uk service to find an insolvency practitioner is the place to start.

What the liquidator does

The liquidator runs the process. gov.uk says they take control of the business as soon as they are appointed and then:

settle legal disputes and outstanding contracts;
sell off the company’s assets and use the money to pay creditors;
meet paperwork deadlines and keep the authorities informed;
pay the liquidation costs and the final VAT bill;
keep creditors informed and involve them in decisions where necessary;
interview the directors and report on what went wrong;
get the company removed from the register.

The Insolvency Service adds that the liquidator secures and realises any assets the company owns, including unpaid invoices for work completed, for the benefit of the creditors. It also says the liquidator considers the directors’ conduct and sends a conduct report to the Insolvency Service. In a CVL, the liquidator acts in the interest of the creditors rather than the directors.

What happens to a director

Point	What the sources say
Control	The director no longer controls the company or anything it owns, and cannot act for or on behalf of the company
Duties	Give the liquidator any information it asks for, hand over the company’s assets, records and paperwork, and attend an interview if asked
Statement of affairs	The directors must send it to the creditors within 7 days of the resolution
Conduct	gov.uk says a director can be banned for 2 to 15 years, or prosecuted, if the liquidator decides the director’s conduct was unfit
Company name	A 5-year ban on forming, managing or promoting a business with the same or a similar name, with exceptions

The name exceptions are a sale by a licensed insolvency practitioner who gives the legally required notice, the court’s permission, and involvement with another company that has used the name for at least a year. We have not researched personal liability, for example under a personal guarantee, so ask the practitioner and a solicitor.

Who controls the records, and who gets the proceeds

Section 103 of the Insolvency Act 1986 says that on the appointment of a liquidator all the powers of the directors cease, except so far as the liquidation committee or, if there is none, the creditors sanction their continuance. A director therefore cannot license the company’s records alone once a liquidator is in place. The court can order anyone holding property, books, papers or records that the company appears to be entitled to to deliver them to the liquidator (section 234), and officers must give the information the liquidator reasonably requires (section 235).

gov.uk says the liquidator sells the company’s assets and uses the money to pay creditors, and the Insolvency Service says the assets are sold and distributed among the creditors. If records count as assets, we read that to mean any proceeds from selling or licensing them would follow the same order. No official source we read says so directly, says whether records are property that a liquidator can sell, or says who signs a data licence for a company in liquidation.

Personal data in the records

The ICO’s due diligence guidance says that on an insolvency, data might be sold as an asset to a different legal person, and that the practitioner may take the controller role for the time being. It expects accurate data, documented decisions, consistent retention, security and information for the people concerned. A separate ICO page says a closing business remains the controller of the personal data it holds, and that the liquidator or administrator takes the key decisions. That page carries a banner saying it is under review after the Data (Use and Access) Act 2025, so check the live version.

For staff records, the ICO’s employment guidance covers sharing workers’ information in an acquisition, merger, reorganisation or insolvency. It says to consider due diligence, establish a lawful basis for sharing, tell workers, document decisions and, wherever possible, anonymise the information before sharing it with another organisation in connection with a prospective acquisition, merger or reorganisation. Our guide to anonymising company records sets out the test, and how long to keep business records covers retention.

Staff, tax and cost

If the closure means 20 or more redundancies at one site, the consultation and notification rules apply. gov.uk’s HR1 guidance says insolvency practitioners must still submit the form, and our HR1 form guide covers it. We have not researched what a liquidator charges, so ask more than one practitioner for a written quote.

What to gather first

The statement of affairs is the first document the directors produce, so start collecting its contents before you meet the practitioner. Section 99 asks for:

particulars of the company’s assets, debts and liabilities;
the names and addresses of the creditors;
the securities the creditors hold and the dates they were given.

Add a list of the systems that hold the company’s records, which of them hold personal data, and which hold data that belongs to clients or is covered by an NDA. The practitioner needs to know what the records are before anyone can decide who may license them.

Records and data licences

Raise the records with the practitioner before the shareholders vote, because the directors’ powers end when the liquidator is appointed. The records may be licensable.

If your company is in or entering a CVL, pass this page to the practitioner, because the liquidator and the creditors will drive the decision.

Personal data in the records stays under UK GDPR until nobody is reasonably likely to identify the people it relates to. Removing names is not enough, and anonymising is itself processing that needs a lawful basis. Take advice before any records that hold personal data leave the company, and see our guide to anonymising company data.

Check the records before they are destroyed

Some company records can be licensed for AI training. Answer four questions to see whether yours might qualify, without sharing any files.

Check eligibility

Next steps

Take advice from an authorised insolvency practitioner before the shareholders vote, and raise the records in your first conversation with them.

Frequently asked questions

What is a creditors' voluntary liquidation?: It is the route gov.uk describes for a company that cannot pay its debts, where the directors propose winding it up, enough shareholders agree and an authorised insolvency practitioner is appointed as liquidator. The liquidator acts in the interest of the creditors rather than the directors.
How many shareholders must agree to a CVL?: gov.uk says shareholders holding 75% by value of the shares must agree to pass the winding-up resolution. The Insolvency Service says creditors must then be notified.
What happens to a director in a CVL?: The director no longer controls the company or anything it owns and cannot act for it. The director must give the liquidator the information it asks for, hand over the company's assets, records and paperwork and attend an interview if asked. gov.uk says a director can be banned for 2 to 15 years, or prosecuted, if the liquidator decides the director's conduct was unfit.
Can I use the same company name after a CVL?: gov.uk says a director of a company in a CVL or compulsory liquidation is banned for 5 years from forming, managing or promoting a business with the same or a similar name. The exceptions are a sale by a licensed insolvency practitioner who gives the legally required notice, the court's permission, and involvement with another company that has used the name for at least a year.
Who gets the money from selling the company's assets?: The creditors. gov.uk says the liquidator sells the company's assets and uses the money to pay creditors, and the Insolvency Service says the assets are sold and distributed among the creditors.