How Long Does a CVL Take?
There are two different timescales to think about.
One is how long it takes to prepare a Scottish Creditors’ Voluntary Liquidation and reach the formal winding-up resolution.
The other is how long the liquidator needs afterwards to deal with assets, creditors, employees, tax and any investigations before the liquidation is complete. A straightforward company with good records can be prepared more quickly than a complex case, but Scottish notice and creditor-decision periods still apply.
We will set out the steps for your company and explain which urgent issues need attention while the CVL is being arranged.
How quickly can a Scottish company enter a CVL?
There is no single timescale that applies to every company.
Before the formal liquidation process starts, sufficient information needs to be gathered to understand the company’s position and prepare the necessary documentation.
The time required will therefore depend partly on how quickly the directors can provide information such as:
- Company accounts and financial records
- Bank statements
- Details of creditors
- HMRC liabilities
- Employee information
- Details of company assets
- Amounts owed to the company
- Finance agreements
- Director’s loan account information
- Details of any current legal or enforcement action
A small company with straightforward affairs and reasonably complete records can normally be prepared more quickly than a business with complex assets, incomplete records or urgent legal issues.
The Scottish statutory timetable
Once the shareholders pass the special resolution to wind the company up, the company has entered voluntary liquidation and a number of statutory timescales apply.
- The creditors’ decision date must be at least three business days after notice is delivered and no later than 14 days after the winding-up resolution
- The directors must send the statement of affairs within the statutory seven-day period, so it reaches creditors by the business day before the decision date
- The winding-up resolution must be advertised in the Edinburgh Gazette within 14 days
- The resolution must be sent to the Registrar of Companies for Scotland and the Accountant in Bankruptcy within 15 days
- Following appointment, the liquidator must make the required statutory notifications
We arrange the necessary timetable and documentation so that directors do not need to manage these requirements themselves.
What happens before the winding-up resolution?
The period before the shareholders pass the winding-up resolution is normally used to prepare the company properly for the CVL.
This can include:
- Reviewing the company’s financial position
- Confirming that a CVL is appropriate
- Considering realistic alternatives to liquidation
- Obtaining details of assets and creditors
- Preparing the statement of affairs
- Preparing shareholder documentation
- Preparing creditors’ decision notices and the statement of affairs
- Advising directors about employees
- Identifying any issues affecting directors personally
- Dealing with any particularly urgent creditor or enforcement issues
The aim is not simply to make the process fast. It is to make sure that the company enters liquidation in an orderly way and that directors understand what is happening.
Can the process be accelerated if the company is under pressure?
We can prioritise urgent cases, but statutory requirements still need to be followed.
Tell us immediately if the company is facing matters such as:
- A winding-up petition
- HMRC enforcement
- Sheriff officer action
- A charge for payment
- Bank account arrestment
- Threatened seizure or attachment of assets
- Landlord action
- Employees who need urgent information
- Loss of access to business premises
These circumstances may change what options are available and the order in which action should be taken.
Do not assume that deciding to enter a CVL automatically stops enforcement or court proceedings that have already started.
Does the company have to keep trading while the CVL is arranged?
No. There is no general requirement that an insolvent company must continue trading until the formal liquidation date.
Whether trading should continue even temporarily depends on the company’s circumstances.
Relevant considerations can include:
- Whether continued trading is likely to generate or lose money
- Whether new liabilities will be incurred
- Whether customers are paying in advance
- Whether employees remain at work
- Whether existing contracts need to be dealt with
- Whether an orderly closure can preserve value for creditors
- Whether there is a possibility of selling part of the business
Directors should take advice before continuing to trade an insolvent company simply to buy more time.
What happens on the day the company enters liquidation?
The voluntary liquidation formally starts when the shareholders pass the special resolution to wind the company up.
The Scottish creditor procedure then follows within the statutory timetable and the authorised insolvency practitioner takes office as liquidator.
Once the liquidator is appointed, the directors no longer control the company’s business and assets in the ordinary way.
The directors remain responsible for providing information, handing over company records and co-operating with the liquidator.
How long does the liquidation itself take?
This is different from the time it takes to place the company into liquidation.
Once appointed, the liquidator must complete the administration of the company. There is no fixed period that applies to every CVL.
A relatively straightforward liquidation may involve:
- Collecting and reviewing company records
- Realising any remaining assets
- Agreeing creditor claims
- Dealing with employee matters
- Completing tax and statutory matters
- Reviewing the company’s financial affairs
- Completing required director conduct reporting
- Making any distribution available to creditors
- Preparing the final liquidation account
The company can therefore remain shown as “in liquidation” at Companies House for some time after the directors have ceased to be involved in its day-to-day affairs.
What can make a CVL take longer?
The liquidation may need to remain open where there are unresolved matters.
Examples include:
- Property that needs to be sold
- Customer debts that need to be collected
- Legal proceedings or disputed claims
- Complex creditor claims
- Outstanding tax matters
- Assets that are difficult to realise
- Complex director’s loan accounts
- Transactions requiring further investigation
- Claims involving directors or connected parties
- Overseas assets or creditors
- Potential distributions to creditors
The liquidator should not close the liquidation simply to meet an arbitrary timetable if doing so would leave company assets or statutory matters unresolved.
Do directors have to stay involved throughout the liquidation?
Usually not to the same extent throughout the entire period.
Directors are often most heavily involved at the beginning, when they need to provide:
- Company records
- Financial information
- Explanations of the company’s affairs
- Details of assets and creditors
- Information about significant transactions
- Answers to questions raised by the liquidator
Once that information has been provided and immediate matters have been dealt with, the amount of director involvement will often reduce considerably.
The liquidator can still ask directors for further information or assistance while the liquidation remains open.
When can I move on and start another business?
You do not normally need to wait until the old company is finally dissolved before moving on with your working life or becoming involved with another company.
A director of a company that has entered CVL is not automatically prohibited from becoming a director of another company.
However, there are important rules to consider, particularly if you intend to use the same or a similar company name, acquire assets from the insolvent company or continue a similar business.
Any director who is subject to a disqualification order, disqualification undertaking or another legal restriction must comply with that restriction.
When is the company finally dissolved?
Once the liquidator has completed the winding up, a final account is prepared and the necessary final documentation is filed.
Unless the court orders otherwise, the company is then dissolved three months after the relevant final return and account are registered.
Dissolution is therefore the final stage of the process. It should not be confused with the earlier date on which the company first enters liquidation.
What can directors do to avoid unnecessary delay?
The best way to help the process move efficiently is to provide clear information as early as possible.
- Respond promptly to requests for information
- Provide access to accounting records and bookkeeping systems
- Identify all company bank accounts
- Provide a complete creditor list
- Tell us about company assets
- Identify money owed to the company
- Provide employee information promptly
- Disclose any director or connected-party transactions
- Tell us immediately about court or enforcement action
- Do not dispose of assets or alter records without taking advice
Incomplete records do not prevent you from seeking advice, but providing what is available promptly can make the preparation considerably easier.
How long does a CVL take? FAQs
Can I put my company into liquidation immediately?
A CVL requires preparation and the Scottish statutory procedure must be followed. Urgent cases can be prioritised, but the necessary shareholder, creditor and notice requirements cannot simply be ignored.
When does the company actually enter liquidation?
The voluntary liquidation starts when the shareholders pass the special resolution to wind up the company.
When is the creditors’ decision date?
For a Scottish CVL, creditors decide on the nomination of a liquidator by deemed consent or a decision procedure conducted virtually. The decision date must be at least three business days after notice is delivered and no later than 14 days after the winding-up resolution.
Do I need to wait until the liquidation ends before getting another job?
No. The company remaining in liquidation does not prevent a former director from taking employment elsewhere.
Do I have to wait until dissolution before becoming a director again?
Normally no. A previous company entering CVL does not automatically prevent you from acting as a director elsewhere, although disqualification restrictions and rules concerning reuse of an insolvent company’s name must be considered.
Why might a liquidation stay open for more than a year?
There may be assets to realise, claims to pursue, creditor disputes, tax matters or investigations that cannot be completed quickly. The length of the liquidation does not necessarily mean there is a problem with the case.
When does the company disappear from Companies House?
Once the liquidation has been completed and the final documentation registered, the company is ordinarily dissolved three months later unless the dissolution is deferred.
Need to liquidate a Scottish company?
If you have decided the company cannot continue, send us the basic details and we can explain what information is required, how quickly the process can be progressed and what it is likely to cost.
If there is urgent creditor or enforcement action underway, tell us at the beginning so that we can consider that as part of the initial advice.