Creditors’ Voluntary Liquidation

What is Creditors’ Voluntary Liquidation?

Creditors’ Voluntary Liquidation or Creditors’ Voluntary Winding-up (“CVL”) is one of the modes of winding-up available.

CVL is a process that enables a company to appoint a Liquidator in order to formally close down a company which is insolvent (unable to meet its liabilities as they fall due).

How to place a company in CVL?

• Directors to make Declaration of Insolvency

Directors of the company to cause a full statement of the company’s affairs showing the assets, the method and manner in which the valuation of the assets was arrived at, together with a list of creditors and estimated amount of their claim.

• General Meeting to pass special resolutions

A general meeting is required to be convened to pass a special resolution to wind-up the company.

• Meeting of Creditors

A notice of meeting of creditors is to be advertised and a meeting of creditors is summoned where the resolution is to be proposed.

Circumstances for a company be placed into Creditors’ Voluntary Liquidation?

Some of the reasons why a company decided to be woundnd-up via CVL are as below:

• The company is facing cash flow difficulties with no chance/intention of revival.
• The company is unable to get any concrete/new contract/sales for some time and the directors did not expect any probable recovery.
• The directors did not want to incur further debts or wishes to limit the liabilities.
•  Non performing subsidiaries with no hope of restructuring/revival.

What is the difference between Creditors’ Voluntary Liquidation & Members’ Voluntary Liquidation?

A Members’ Voluntary Liquidation is where the company is solvent and declaration of solvency is made by the Directors while a Creditors’ Voluntary Liquidation is where the company is insolvent (i.e unable to meet all its debt obligation as they fall due) and declaration of insolvency is made by the Directors.

What is the timeline to complete CVL?

Depending on the circumstances of each case, the overall timeframe for CVL varies. Kindly contact us to discuss further.

How can VCCA assist?

VCCA is a member firm of Malaysian Institute of Accountants (“MIA”) and our partners are licensed insolvency practitioners approved by the Ministry of Finance.

Together with our team of experienced chartered accountants, VCCA work and liaise with various professionals such as lawyer, banks/financial institutions, government authorities and other related professionals to achieve the best possible solution and highest recovery for all stakeholders throughout the insolvency, restructuring, receivership or corporate rescue process.

Our team of highly qualified professionals has worked throughout various industries & assisted numerous companies in financial distress and would be able to assist you.

For more information contact us at +603-6734 9838.