What is a Creditor’s Voluntary Liquidation?
A Creditors Voluntary Liquidation (CVL) is the winding-up of a company when it has creditors it cannot pay.
A CVL is initiated by passing a Special Resolution of the company’s shareholders. Dissolve’s streamlined CVL process allows you to pass the necessary resolutions to commence the liquidation within minutes usually by just signing the documents we send you (depending on the complexity of the company’s structure).
Dissolve conducts hundreds of CVLs every year. Our highly systematised approach allows us to complete the process for small to medium businesses quickly and efficiently, and therefore at the lowest possible cost.
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The Process
Appointing a Liquidator (Day 1)
The days following appointment (Days 2 to 10)
Dissolve lodges various appointment documents and advises various government organisations, such the Australian Tax Office and state government revenue offices, of the appointment;
The Director(s) complete a Questionnaire and deliver the books and records of the company to the Liquidator;
The Liquidator collects and sells the remaining assets of the company;
The Liquidator prepares an initial Creditors Report which advises creditors of the appointment
The Liquidator’s tasks (1 to 3 months)
The Liquidator reviews the books and records and reports findings to the regulator;
The Liquidator prepares a Statutory Report to Creditors within three months of the appointment date to inform creditors of the progress of the Liquidation and whether creditors are likely to receive a dividend payment from the Liquidation;
If the Liquidator has funds available he will pay a Dividend to creditors.
Finalising the liquidation (A further 1 to 3 months)
The Liquidator may send a Final Report for Creditors;
The Liquidator will lodge various documents with the regulator and request permission to deregister the company.
Yes, there can be variations from the above but the above is accurate for around 80% of liquidations done by Dissolve. Statistics tell us that other liquidators can take years to complete the same process.
OUR
Team
Cliff Sanderson
PARTNER – DISSOLVE
Cliff is a corporate restructuring specialist with over 30 years of experience in Australia and internationally. He is the founder of Dissolve.
Brad Vincent
SENIOR CLIENT ADVISOR
After 15 years of being an advisor, Brad has developed an excellent understanding of the legal and practical issues facing a director of an insolvent company – it is rare for a director to throw a new situation at Brad.
Geoff Granger
PARTNER – DISSOLVE
Geoffrey has over 35 years’ experience in restructuring, turnaround and insolvency. As a registered liquidator, he has extensive experience in all areas of investigations and recoveries.
Making the decision.
Deciding to liquidate a company can be difficult and stressful. We understand your business means a lot to you, and letting that go can be hard.
But a liquidation can also help in the following ways:
Speak to an expert today.
Simple steps with our experts.
Get your 30 minutes free, confidential advice. It’s obligation-free. In one call we can assess if liquidation is right for your company. If it is, we’ll give you a free written quote.
Give us the go ahead and we will draw up the documents and email them to you, usually within two hours.
All directors and shareholders sign and date the forms where marked, and you then email them back to us with proof of payment for the agreed fee.
The company is now in liquidation. Dissolve now deals with the creditors on your behalf.
FAQ
What is a Creditors Voluntary Liquidation (CVL)?
A CVL is the process used to formally wind up an insolvent company — one that can no longer pay its debts as they fall due. It’s the most common type of liquidation in Australia and is initiated by the directors and shareholders, not the courts or creditors.
How does a CVL get started?
Directors call a General Meeting where shareholders vote on entering liquidation. A Special Resolution needs to pass, which requires at least 75% of the shareholding voting on the day to agree. From there, a Registered Liquidator is appointed and the process begins.
What happens to the director when a CVL is initiated?
The director’s powers are suspended on the liquidator’s appointment. There may be a minor mark on their credit record, but it’s not the same as personal bankruptcy. Directors aren’t automatically liable for the company’s debts — unless there’s an issue like insolvent trading or a Director Penalty Notice from the ATO.
What happens to employees when a company enters CVL?
Employees lose their jobs, but the government’s Fair Entitlements Guarantee (FEG) scheme can cover unpaid wages (up to 13 weeks), annual and long service leave, payment in lieu of notice (up to 5 weeks), and redundancy pay (up to 4 weeks per year of service). Any remaining entitlements make them a priority creditor in the liquidation.
How long does a CVL take?
A straightforward CVL can wrap up in around three months. More complex ones — larger asset pools, investigations into misconduct — typically run six to eight months, sometimes longer. Directors are usually done with their own involvement within the first two weeks.
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