If you are considering closing down your limited company, you need to know how your financial situation affects which liquidation route will be available.
The choice between a CVL or MVL will depend on your company’s financial health and whether it is solvent or insolvent.
Keeli MacMillan
Content Marketing Executive
April 10, 2025
A Members’ Voluntary Liquidation (MVL) is a liquidation option for solvent companies. It is a cost-effective and tax-efficient way of closing down a financially stable limited company.
If your company cannot pay its debts and is in financial distress, then a Creditors’ Voluntary Liquidation (CVL) would likely be the best option for liquidation.
The liquidator will asses the company’s financial situation and decide if a cvl or mvl is most appropriate.
An MVL is the official process of winding up a solvent limited company. There are various reasons why closing a solvent limited company is a good choice. Releasing the cash tied up within a company is common for those wishing to start a new project, enter into retirement, return to employed work or move abroad.
If your company has been trading for at least 24 months, has at least £25k in net assets, and is able to pay all its debts and liabilities before and after liquidation, then an MVL can be a fast and profitable way to close down the company. Once all creditors have been paid, any remaining cash is released and distributed to you and any other company directors.
An MVL also offers tax benefits such as Business Asset Disposal, which sees approved companies only paying a fixed 14% tax rate on all company assets.
If you are ready to discuss liquidating your solvent company, then contact us today.
A CVL is a liquidation option available for insolvent companies in financial distress. If your company is insolvent, it will be unable to meet all its financial obligations and/or it will have more debts and liabilities than assets.
Owning an insolvent company can be distressing. However, the CVL process eliminates the stress of creditor pressure and helps avoid certain legal proceedings after the liquidation process starts.
During a CVL process, investigations will be carried out into the company’s operations, looking for potential reasons that lead to the liquidation process. All company assets will be sold to distribute the money fairly among your creditors.
It can be tempting to avoid dealing with the problem of an insolvent company. However, in doing so, you stand to make your situation worse and face statutory demands, which can lead to allegations of misconduct leading to disqualification.