Case Study for a Creditors’ Voluntary Liquidation
Hugh Jesseman and the Antony Batty London Team achieved a 43p in the £ distribution to creditors from a CVL
The main duty of an Insolvency Practitioner when winding up a failed company is to the creditors. This case study highlights a Creditors’ Voluntary Liquidation (CVL) which ran smoothly all the way through and yielded a distribution to creditors of 43p in the £ – a good result.
The Reason for this Creditors Voluntary Liquidation was Covid 19
Hugh Jesseman, one of our Licensed Insolvency Practitioners was appointed as Liquidator of 2020 Leisure Limited (The Company) on 8 October 2021. Based in Portsmouth, the Company was incorporated on 2nd January 2020, and intended to trade as a nightclub. However, as a result of the Covid 19 pandemic and the subsequent national lockdowns, the Company was unable to trade in any way, which resulted in it becoming insolvent and entering a CVL.
We work with businesses of all sizes and in all sectors to help find practical, common-sense solutions to financial difficulties. Where possible we will recommend and implement restructuring plans to help turn failing businesses around.
However, when, as in this case, there is no alternative to liquidation, our traditional standards of integrity, professionalism and care really come to the fore at what can be a very difficult and stressful time, especially given the unexpected arrival of Covid 19 and the massive disruption it caused to business.
The outcome of this CVL was that on 21st February 2023 we were able to declare a dividend to unsecured creditors (there were no secured creditors) of 43.16p in the £.
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If your business is facing financial difficulties, the best advice is always to seek professional advice early.
As our insolvency and restructuring guide shows, the road from financial distress to crisis can be quick and brutal. With the former, there might still be an opportunity to restructure the business and turn it around if professional advice and help is sought quickly.
However, once the crisis point is reached, often characterised by a lack of liquidity, which makes it impossible to pay HMRC, suppliers, meet overheads, pay staff, or simply finance the running of the business, then that is when a formal insolvency procedure is required.
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