How much does a CVL cost?

It can be daunting when considering entering into a Creditors’ Voluntary Liquidation (CVL) and one of the first questions contractors ask is ‘How much does a CVL cost?’ The cost of liquidating your limited contractor company will depend on the size of your company, its current financial situation and the complexity of the case.

Although there are costs involved, it is important to remember the benefits of a CVL. In short, you will have your company dissolved in a professional and organised manner.

What do CVL costs include? What do contractors get for their money?

To carry out the CVL process, you will need to hire a licensed Insolvency Practitioner (IP).  You cannot carry out a CVL without hiring a licensed IP.

The costs of a CVL are broken down into two stages.

First, the pre-appointment stage and second, the post-appointment stage.

1. The pre- appointment stage fee covers the administrative work involved in taking the necessary steps to assist with placing the company into liquidation. This is usually a fixed fee.

If you hire a reputable and experienced liquidator like SFP Group, pre-appointment fees will start at around £3,000+VAT.

2. Post-appointment stage fees are related to the costs incurred by your IP when they have taken on your case, placed your company into liquidation and carried out all their work.

The costs of an IP will cover the following:

  • Processing all creditor claims for monies owed;
  • Investigating the management and transactions of the company before liquidation proceedings;
  • Valuing and selling all company assets;
  • Regularly updating creditors on the liquidation process and status;
  • Assisting with employee claims and distributing all proceeds of the liquidation to creditors.

The major difference between pre-appointment fees and post-appointment fees is that the post-appointment fees must be agreed by your creditors.

These fees will vary from case-to-case but an initial fee forecast must be prepared by the IP for creditor approval. If any changes need to be made to the initial estimate, the IP will need to seek further approval from your creditors to do so.

How are CVL fees paid?

The cost of the pre-appointment CVL fee to put your company into liquidation can be paid by the sale of your company assets once they have been released by the IP.

Be aware, if there are not enough assets in your limited company to pay the fee in full, then it is down to you and any other directors to pay the fees from personal funds.

What if there's a shortage of money in my company to pay CVL costs?

If there are no assets available in your company and you and any other directors cannot raise personal funds to pay the CVL fees, then you will need to wait for a winding-up petition to be submitted to the courts. This will result in a compulsory liquidation.

When it comes to the cost of a CVL, we can only speak for ourselves, but…

At SFP, our approach is to always ensure that whatever the costs of your CVL, the fees will be transparent, reasonable and fair. We prioritise providing you with a high level of service that will ensure that the professional liquidation of your company is carried out smoothly, while factoring in that you’ll want the fairest fee structure possible. 

If you wish to speak to us at SFP to answer questions like ‘How much does a CVL cost?’ or any other liquidation query you might have, contact one of our CVL experts by visiting us online.

Wednesday 24th Apr 2024