Frequently Asked Questions


What is a Creditors Voluntary Liquidation (CVL)?

A Creditors’ Voluntary Liquidation (CVL) is used by insolvent companies when they can’t pay their debts. It involves the dissolution of the insolvent company and the redistribution of the company’s assets to the creditors. This procedure enables directors to write off unsecured company debts that are not personally guaranteed. The majority of liquidations carried out in Ireland are CVLs.

Directors may see voluntary liquidation as a welcome and safe exit from a stressful situation; whilst addressing all of the creditors, appropriately.
If the limited company has liabilities that it cannot afford to pay and the directors would like to move on without the stress of the company’s debts hanging over their heads, this type of business liquidation may be an appropriate option.

Although it should be seen as a last resort, liquidating a company via this route can be considered a rational decision.

What is a Members Voluntary Liquidation (MVL)?

A Member’s Voluntary Liquidation (MVL) is the appropriate way to liquidate a solvent (a company that can pay its debts) Irish company and can be used as part of an exit strategy.

An MVL may be considered if you have a solvent company that you want to close as part of your business plan and reduce taxation. Your company may have outlived its purpose and be heading towards a natural end of trading, or you may wish to extract the value of cash and assets from the company in a tax efficient manner.

For an MVL, the directors must signa declaration stating that all creditors will be paid within a limited time (usually 12 months).

What is the benefit of a Members Voluntary Liquidation (MVL)?

For most companies that get to the MVL stage, the process is purely a matter of convenience.  After an MVL the company ceases to exist and so do the administrative requirements such as submissions to the CRO and annual accounts preparation.

There are also some potential tax advantages as the value extracted from the business in this way is subject to capital gains tax rather than income tax, USC and PRSI which would be paid on salary payment for example.

Correctly completing an MVL is an administrative process that, whilst it is recorded on the CRO register and appears in An Iris Oifigiuil, it isn’t seen as a business failure and as such has no bearing on the individual directors’ business reputation.

What are the differences between a CVL & MVL?

Is the company able to pay its debts or not? If it can pay all its debts then the MVL process is used. If the company cannot pay all its debts then the Creditors Voluntary Liquidation (CVL) process is used.

How do I know if I have to put my company into Liquidation?

The official answer is that a company is insolvent when it cannot pay its debts as they fall due. This is not as easy to recognise when you are in the thick of trying to balance everything. The tell-tale signs will be there, but you may not want to see them. These signs include the following: -

  • Always being upto the overdraft limit
  • Bank refusing additional facilities
  • Payments being missed or returned
  • Loss of asignificant customer
  • Difficulty in collecting debts
  • Sheriff’s letters or visits
  • Cutting your own salary
  • Borrowing from family to put into the business
Differences’ between Winding up, Liquidation & Bankruptcy?

Liquidation and ‘winding-up’ are often used in the same context. Both of these terms refer to liquidating a limited company; either because the company has cash-flow problems, or because there are cash and assets, such as property, that the directors and shareholders would like to extract.

Sometimes people mistakenly refer to the phrase “company bankruptcy”. Bankruptcy is only relevant to an individual, partner, or sole trader and not a limited company.

Can I liquidate my own Limited Company?

The short answer is no. All insolvency procedures requires the services of a licensed Liquidator.

Liquidations Costs

Who pays for the Liquidation?

As a limited company is a separatelgal entity, it is usually responsible for its own liquidation costs.

‍Sale of company assets
In the role of liquidator, we undertake the selling of company assets including any work-in-progress, stock, etc. Generally, the assets will require a valuation to ensure that they are sold for a realistic amount in the circumstances. In most cases, this process can be carried out fairly quickly.

Our agreed upfront low-cost fee for completing the liquidation is generally covered by asset realisations. However, if asset realisations are insufficient, the directors may need to cover the cost.

Liquidator Appointment

How do I choose a Liquidator?

Choosing a liquidator can be hard. You need to consider your options carefully before choosing your Insolvency Practitioner (IP) and proposing them to your company creditors.

You need to remember that once appointed, the Insolvency Practitioner (liquidator) has almost complete control over the process, so it’s not a decision that should be made without considering all of your available options.

You should choose the best liquidator for your company by keeping 2 principles in mind;

Know the average cost across the market for a liquidation

Make sure you know exactly what is included in the price and the level of service you can expect

Liquidators that deflect your questions are likely to be those that will keep you in the dark throughout the process – find a pragmatic IP who is happy to go through everything before you sign on the dotted line.  They can advise prior to instruction of the problems that could crawl out of the woodwork and should discuss these with you openly.

If you have found a Liquidator or insolvency expert who is offering a low price, that’s great – just make sure you know exactly what’s included in the price before going ahead.

The good news is, if your company has assets worth more than the cost of the process you have chosen, then the fee can be taken from these and your personal finances shouldn’t need to be touched.

Level of service
Unfortunately there are many firms out there that, once you have agreed to go ahead with a process, are difficult to get hold of.

You should be made aware of your case manager or administrator, and have a direct dial for them – we recommend that before you sign up, you give your contact a ring to ensure that you can get hold of them easily.

We would suggest that you are wary of those that are promising the world without highlighting any of the potential problems that could crop up within your initial conversations.

From our experience, to choose the best liquidator, statements such as ‘leave it up to me’ are not helpful, as you should be aware of what is happening at any given point. Someone that is happy to explain the ins and outs of the process is much preferable.

Those that point out issues will give you the chance to either resolve them or ask for realistic ways in which to deal with these within the process, without this affecting you or any future directorships.

Once the company has entered liquidation, it becomes much more difficult to discuss your options with the Liquidator, because of creditors’ involvement.

How is a Liquidator appointed?

The shareholders of the company nominate their choice of liquidator. That nomination will usually be ratified at the creditors meeting.

At the creditors meeting, if another liquidator is proposed, the liquidator is appointed, by a majority in value of creditors. This shows the power that is held by creditors who are owed large sums of money.

Any creditor whose interest is "secured" is unable to vote. Examples of secured creditors can include: Banks, Hire Purchase Creditors, Factoring Companies

The Liquidation Process

How Long does a Creditors’ Voluntary Liquidation (CVL) Take?

Once the decision is taken to liquidate, the timeframe can be fairly rapid, with the company in liquidation within approximately 14 days. There is a minimum statutory notice period for creditors of 10 days and a 10 day legal notice must be placed in 2 newspapers.

After the creditors meeting it will generally take about 12 months to complete the liquidation.

What happens at a Creditor’s Meeting?

At least one director must attend and chair the Creditor’s Meeting. The presiding director reads a statement giving some background into the company and the reasons for the liquidation. A Statement of Affairs showing the assets and liabilities of the company is also presented at the meeting. Those attending the meeting are then invited to ask any questions. It is important that you receive sound professional advice in order to keep control of the meeting and to answer any questions as honestly and succinctly as possible and to put your side of the story in the best possible light.

After the question time there may be a vote on the liquidator and a vote for the Committee of Inspection. The Committee of Inspection can be made up of members and creditors and their role is to assist the liquidator, agree fees and attend meetings to oversee the course of the liquidation.

What happens after the Liquidator is appointed?

The liquidator must follow timeframes as set out by the relevant legislation.

Once the company is placed into liquidation the liquidator will move to secure and liquidate any assets. Notices are sent out to known creditors informing them of the liquidator’s appointment and asking them to forward a statement of how much they are owed.

The liquidator will also organise the return of any unpaid goods which are subject to retention of title to creditors.

The liquidator will process employee claims for redundancy, unpaid wages, outstanding holiday pay and statutory minimum notice.

The liquidator will examine the books and records and investigate the reasons for the liquidation and the actions of directors. Following this investigation, the liquidator prepares and submits a report to the ODCE (Office of The Director of Corporate Enforcement).

The liquidator may decide to take action against directors and/or third parties, including restriction and court proceedings. This will lengthen the process of the liquidation. It will also impact the amount, if any, that is available for distribution to creditors.

At the end of the liquidation process if there are funds available the liquidator will make payments to creditors in order of priority.

What is the order of Creditor payment during insolvency?

Secured Creditors
At the top of the creditor priority list come the company’s secured creditors, who hold a fixed or floating charge over a business asset. They have a legal right or charge over company property, which can include anything from buildings and equipment to vehicles, machinery and intellectual property. Examples of secured creditors include leasing companies, banks and other lenders. Once the liquidator has received their fee, the secured creditors are next to receive the money they are owed.

A fixed charge is held over a specific asset which was financed by the lender. That includes business premises, intangible assets, financed vehicles and financed machinery. The fixed charge will be registered at the CRO. Those with a fixed charge are one of the first to be paid from the liquidation after the insolvency practitioner has received their fee.

A floating charge relates to the other company’s assets including cash at bank, fixtures and fittings, unencumbered plant and machinery and book debts when there is no invoice factoring agreement. Floating charge holders are placed further down the hierarchy of payment after preferential creditors (i.e. the former employees)have been paid.

It is not uncommon for a bank or asset-based lender to have both fixed and floating charges registered at Companies Registration Office (CRO).

Preferential Creditors During Insolvency
Preferential creditors rank after secured creditors. These include amounts due to Revenue and Rates for the taxes/charges incurred in the 12-month period prior to the creditors meeting. Amounts due to staff for redundancy, outstanding holiday pay and wages and statutory minimum notice pay are also preferential creditors. Where the amounts due to staff are paid by the Department of Employment Affairs and Social Protection under the insolvency payments scheme then the Department of Employment Affairs and Social Protection is a preferential creditor.

Unsecured Creditors
Basically all other creditors come within this group. This group will include, suppliers, trade creditors, bank overdrafts and loans, directors loan accounts and amounts due to Revenue and Rates which are greater than 12 months old.

Unsecured Creditors Connected to the Business
If a director or employee lends the company money on an unsecured basis, or salaries and wages for company owners and directors are unpaid, they will also become unsecured creditors. This can also include money borrowed from family members. Generally speaking, unsecured creditors will not typically receive a repayment.

Right at the very bottom of the pile are the company shareholders. These are the people who have invested money in the business on a risk basis, and as such, they are not entitled to remuneration or repayments in a company liquidation until the claims of all of the above groups are satisfied.

What happens to employees during an insolvent liquidation procedure?

When a company becomes insolvent, one of the major concerns for directors is what happens to their employees. Even in insolvency, it’s not a foregone conclusion that the business will close down, however, and there are safeguards in place to protect employees.

If the business is sold on as a going concern, employment contract terms and conditions are safeguarded under TUPE - Transfer of Undertakings (Protection of Employment) Regulations, 2006.

When your staff are made redundant
If the business is liquidated, the company will close down with the loss of all jobs, but employees can claim statutory payments such as arrears of wages, outstanding holiday pay, minimum notice pay and outstanding pension contributions. Some members of staff may also be eligible for redundancy pay.

Any shortfall in these payments can be claimed from the Department of Employment Affairs and Social Protection. The liquidator will make the claims on behalf of the employees.

There are certain limitations:

  • Up to eight weeks’ arrears of wages
  • Up to eight weeks’ outstanding holiday pay
  • Statutory Minimum Notice Pay in lieu of notice depending on your years of service (max 8weeks)
  • Some unpaid pension contributions
  • Redundancy pay 

Gross weekly pay is capped at €600per week. The outstanding arrears must have been incurred in the 18 months prior to the date of liquidation or employment termination.

Employees’ rights to claim redundancy pay
If your employees have worked under a contract of employment for a continuous period of two years or more, they may be eligible to claim redundancy.

The rate of statutory redundancy payis two weeks’ pay (capped at €600 per week) for each year of service plus an additional week’s pay.

When to tell staff, your company is insolvent?

If your company is heading towards insolvency, one of your main concerns may be centred on what this means for your employees. Should your company’s financial problems not improve, you may have to consider the prospect of closing your company for good, leaving your staff out of a job. Having to break this news is an unenviable task but is one which should be done in as timely a manner as possible once the future path of the company has been decided.

When insolvency is inevitable
All businesses go through ups and downs, and in order to reduce causing unnecessary stress it may be advisable to wait until you are absolutely certain that the company has no future before notifying your staff. However, as soon as you know closing the company is inevitable, you should make it a priority to deliver this news to your employees. This will give them time to get their head around the situation and start planning for their future away from the business.

Depending on the size and structure of the business, office gossip about the impending closure of the company maybe rife. Often the not knowing is one of the most stressful parts of the process, with staff constantly being on edge and worrying about an uncertain future. Reducing this uncertainty as much as possible is beneficial for all concerned.

Notifying your employees
When delivering the news, it is important to be clear and honest about the situation, while keeping in mind the severity of the situation and how the news could have major knock-on effects in other areas of their lives.

If your company is being wound up by a creditor, or if you are closing the business through a Creditors' Voluntary Liquidation (CVL), this process will be handled by the liquidator. Should it not be possible for you to deliver the redundancy news to your staff, maybe due to the speed the closure ends up happening at, the appointed insolvency practitioner will instead bring them up to date on the company’s position and notify them that they are being made redundant. The insolvency practitioner will also inform your staff of their eligibility to claim redundancy pay and other statutory entitlements, and ensure they have the correct forms they will need to start this process.

Winding Up Orders

What is a Winding Up Petition?

A company can be wound up by the High Court at the instigation principally of any member, director or creditor of the company. The Court appoints the liquidator and he/she becomes an officer of the Court and works under its supervision. Under the Companies Act 2014, the Registrar of the Court supplies the copy of the court order to wind up the company to the Registrar.

Statutory requirements
A petition must be presented to the Court and when a winding up order is made a copy will be submitted to the Registrar by an officer of the Court. The circumstances in which a company maybe wound up are stated in section 569 of the Companies Act 2014.

A company may deemed unable to pay its debts, under section 570 Companies Act 2014, if a creditor is owed a sum greater than €10,000 and a demand served on the company at its registered office has not been met within 21 days to the reasonable satisfaction of the creditor.

Upon a Winding Up Petition being advertised, a company’s bank account will typically be frozen meaning business is immediately halted. While a WUP does not necessarily mean the end of your company, you will have to move fast if you want to save it and stop it being wound up.

For more information visit the Companies Registration Office here:

Can a Winding Up Order be stopped?

Once the court has issued a winding up order there is nothing that can be done to stop the company from being completely liquidated. However, there is a short period of time during which you can take action to prevent the order from being issued in the first place.

Can a company be forced into Liquidation?

Yes – Compulsory Liquidations are usually initiated by a creditor that is looking to force a company into closure via a court order application.  The creditor’s debt must be in excess of the High Court limit of €10,000. The process is usually instigated with a winding up petition and once it is heard at court, it can become a winding up order.

This procedure is often used to windup your business as a last resort by disgruntled creditors after failed negotiations over missed payments and having exhausted all other debt collection methods. This insolvency procedure is usually handled by a provisional, or a court appointed Liquidator. Therefore, this is not a voluntary process for directors.

The conduct of the directors is reported back to the Office of the Director of Corporate Enforcement (ODCE) at the end of the liquidation proceedings and failure to cooperate with the court appointed Liquidator can have serious repercussions.


What is a Debenture?

A debenture is a document that lays down the terms and conditions of a loan and provides clarity and security to lenders if the borrowing company becomes insolvent. Attaching a floating charge to the debenture offers further benefits, enabling the holder to rank above unsecured creditors when it comes to repayment.

The agreement will specify the terms and conditions of lending, including: Loan amount, Interest rate applied – this can be fixed, or variable according to the bank rates. Repayment amount and frequency, fixed repayment date or ‘on demand’, charges (assets) secured on the loan.

There are 2 types of charges.

A fixed charge is held over a specific asset which was financed by the lender. That includes business premises, intangible assets, financed vehicles and financed machinery.

A floating charge can be held overall of the company’s assets, or certain classes of asset, and these can be moved or sold in the course of normal business. When a company enters insolvency, the floating charge is said to ‘crystallise.’ This means the assets can no longer be dealt with by the company without express permission from the lender. The lender may even decide to appoint a Receiver over the assets, if the floating charge covers the majority of company assets. So a company could have both a Receiver and a Liquidator in place at the same time. The Receiver would deal with the assets which are the subject of the charge and the liquidator would deal with all other aspects of the Liquidation.

What type of asset might have a floating charge attached? A floating charge may be held over various classes of asset, including: Stock, Raw materials, Cash, Work-in-progress, Fixtures and fittings

The fluid nature of a floating charge means there are no restrictions on the use of these assets when the company is solvent. Only when it enters insolvency is the lender able to take action to recover their money.

Company Strike-Off

What is a Voluntary Strike-Off?

Strike-off is not always involuntary. A company that ceases to trade, or has never traded, and has no outstanding creditors can request that the Registrar strike off the company. Under the Companies Act 2014, this procedure has been placed on a formal setting.

Voluntary strike-off can only be requested if the company’s returns with CRO are up to date and the assets and liabilities of the company are each less than €150. Written confirmation must also be obtained from the Revenue Commissioners that it does not object to the company being struck off the register.

FormH15 - Request for Voluntary Strike-off is completed and has a filing fee of€15. Form H15 is usually submitted together with the required resolution of the company (G1-H15) - filing fee €15.  Both the application and the resolution of the company are required and the intention to voluntarily strike the company off must be advertised in one daily newspaper.


What are the potential consequences for the Directors?

The most important thing for directors to realise when liquidating a company is that their responsibilities undergo a marked shift if the company becomes insolvent.

Once insolvent, the directors must prove they have acted in the best interests of the creditors. To avoid the threat of personal liability, it is important that directors act responsibly and take professional advice, immediately.

Directors should be aware that once a Liquidator is appointed, they will have a responsibility to investigate the actions of company directors during the period preceding the liquidation.

Principally, the liquidator looks for clarification that, as soon as the director became aware of the insolvency he/she put the interests of creditors first. Where this is not the case, the director becomes open to charges of reckless or fraudulent trading. If this can be proven, the director may become personally liable for some or all of the company debts.

Is a Director allowed to buy back company assets?

A director of a company which has gone into liquidation is allowed to buy back assets. However, the liquidator is obliged to inform all creditors of the proposed sale and give 14 days’ notice before making the sale.

What are a Directors duties and responsibilities during insolvent Liquidation?

Director responsibilities during insolvent liquidation must be managed sensitively.

Failure to act in a prescribed way could result in accusations of wrongful or unlawful trading further down the line. The result of which could be a penalty, a director restriction or disqualification or even personal liability for a proportion of the company’s debts.

Once a company becomes insolvent, the directors’ responsibility shifts from being to the company’s shareholders or members, to its creditors.

The company must consider ceasing to trade immediately and safeguard its assets in the interests of the creditors. The company should only continue to trade, if to do so would bring some benefit to creditors.

Acting responsibility from the moment you realise the company is insolvent is essential to removing the threat of personal liability.

Cease Trading When You Realise Company is Insolvent
The moment you realise your company is insolvent, you should stop trading. Do not send out any more products, issue any invoices, pay any staff, or attempt to seek finance and do not take any additional credit.

Any action at this stage that is not in the clear interests of company creditors could put you at risk of accusations of wrongful trading.

Company liquidators have a legal mandate to investigate the behaviour of directors during the period leading up to the liquidation.

Where wrongful trading can be proven, directors could face a restriction or disqualification order which would prevent serving as a company director for a minimum of 5 years.

Where fraudulent trading is proven, more serious repercussions such as fines, penalties, and even a prison sentence are potential consequences.

Director’s Powers Cease
Directors powers cease once the Liquidator has been appointed, unless specifically instructed by the liquidator. Directors are however obliged to cooperate with the liquidator.

Hold a Shareholder Meetings
When the liquidation is voluntary, directors must call a meeting of shareholders, just before the creditors meeting to vote on the ‘winding up’ of the company. At least 51% of shareholders must vote to pass the resolution.

Advertise the creditors meeting
The legal notice calling the creditors meeting must be advertised in 2 daily newspapers at least 10 days before the meeting date.

Appoint an Insolvency Practitioner
Appointing a licensed insolvency practitioner (liquidator) is a legal requirement at this stage.

Usually, the company accountant or solicitor will have a prior relationship with an insolvency practitioner which determines the selection, but failing that you should look for someone who can demonstrate experience with insolvencies in your business niche.

Director’s Duty to Prepare Statement of Affairs
Preparing the Statement of Affairs in insolvency is one of the final key roles of the director and a key handover document to bring the liquidator up to date on the situation.

This document should breakdown the company’s current financial situation and include asset valuations, a recent balance sheet, a list of employees, creditors and suppliers, and full details of debts.

Director’s Duty to Cooperate with Liquidator (Office Holder)
Limited Company Directors have a legal duty, once insolvent, to deliver any books and records and information for that the liquidator requires for the purposes of his/her investigation.

Company Directors Must Agree to be Interviewed by the Liquidator
As part of the liquidation proceedings, the liquidator may ask for an interview with the company directors.

You are legally obliged to attend the interview and answer the liquidator’s questions to the best of your ability.

If the interview gives the liquidator cause for concern about the way the business was run, or you fail to comply with the liquidator’s requests, allegations of misconduct could be made and may result in a restriction.

Directors’ Loan Accounts
A directors’ loan accounts which shows that a director owes money to the company will usually be regarded as an asset in an insolvency situation that must be repaid for the benefit of the company’s creditors. In some cases, directors’ loans that have been written off in the company’s accounts can be reinstated by the liquidator.

This is often the case if the loan contributed to the demise of the company in any way.

If you are unable to repay the loan from your personal funds, you may have to follow a personal insolvency route such or Personal bankruptcy.

What is the potential for Director’s to be held personally liable for company debts?

In general, the limited company structure is there to keep a clear distinction between personal and corporate liability. The principle exceptions to this are where:

The Director has signed a Personal Guarantee – these documents are specifically designed to breach the corporate veil and force an individual to personally guarantee a company debt.

Where there is evidence of reckless or fraudulent trading – where the director has ‘knowingly’ been a party to the carrying on of the business of the company in reckless manner he or she may beheld personally liable for some or all of the debts. Furthermore any person whether a director or not can be made personally liable if he or she was ‘knowingly’ a party to the carrying on of the business of the company with intent to defraud creditors.

Criminal liability may also be imposed on a director or secretary found guilty of fraudulent trading.

Where there is evidence a director has unfairly preferred one creditor over others (especially a connected party) then the liquidator has to power to reverse the transaction if it occurred within 2 years of the winding up.

What will happen to me (Director and/or Shareholder) after Liquidation?

Having a limited liability company means that the directors have little risk (or limited liability) if the company fails, as long as they have acted properly and acted in time. The main thing you will be asked to do it to cooperate with the liquidator.  This will involve passing on all company assets to the liquidator and the company books and records. But, and it is a big but, if you fail to act in time, fail to act reasonably, fail to keep books and records, continue taking credit KNOWING that the company cannot possibly repay it, then you ARE at risk. So act now and get help for your company and more importantly start reducing your own risks.

Voluntary liquidation is the quickest most efficient way to deal with an insolvent company that has no future. As a director of an insolvent company, you are at risk if you do not act. This risk RISES the longer you don't act to put the company into liquidation.

Liquidation is a powerful way to END creditor pressure and let you get on with your life.  

If you have signed personal guarantees or indemnities to lenders, then the liquidation could lead to them being called in if the bank cannot get its money back from the company. There is little that can be done about that, but you should not delay decisions on liquidation to try and prevent a PG being called in. All banks will agree a deal to repay the PG over time - provided you work with the bank to reduce their exposure.

Finally, please remember this: no business is worth losing your health, relationships, marriages or your children over. Act properly, take advice, get the problem sorted and then get on with your life. In a little while the stress will go, and you can focus on other things that are more important.

Creditors & Shareholders

If I am a creditor, do I have to attend the Creditor’s Meeting?

A creditor is not obliged to attend a Creditor’s Meeting and will still have a valid claim in the liquidation.  Whether you attend or not, does not affect the amount of your claim. You can also nominate a proxy to attend on your behalf.

Can Shareholders be made liable for company debts?

In a winding up, shareholders are liable only to the extent of any unpaid shares held which is rare.

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