What is a Creditors Voluntary Liquidation (CVL)?

A CVL is when the directors of an insolvent company decide to wind it up voluntarily rather than waiting for a creditor to force the issue via a winding-up petition. The directors pass a resolution, appoint a licensed insolvency practitioner as liquidator, and the liquidator realises the company assets and distributes them to creditors in order of priority. The company is then dissolved.

How much will I get back as an unsecured creditor in a CVL?

Typically very little. Statistics from the Insolvency Service show that unsecured creditors in CVLs recover an average of 3.2p in the pound (3.2% of what they are owed). Many CVLs pay nothing to unsecured creditors because the assets are consumed by the liquidator fees, preferential creditors (employees), and secured creditors (banks with charges). However, you should still file your claim because some CVLs do produce a dividend.

How do I file a claim in a CVL?

The liquidator will write to all known creditors with a "proof of debt" form (Form 4.25). Complete it with: the amount owed, the date the debt arose, whether you hold any security, and attach supporting evidence (invoices, contracts, correspondence). Return it to the liquidator by the deadline stated in the letter. If you are not contacted, you can proactively submit your claim to the liquidator directly.

What is the order of priority in a CVL?

Creditors are paid in this order: (1) Fixed charge holders (secured on specific assets), (2) Expenses of the liquidation (including the liquidator fees), (3) Preferential creditors (employee wages up to £800 each, holiday pay), (4) The "prescribed part" (a ring-fenced fund for unsecured creditors from floating charge realisations, capped at £800,000), (5) Floating charge holders, (6) Unsecured creditors, (7) Shareholders. Most CVLs do not reach step 6.

Can the directors start a new company after a CVL?

Yes, unless the liquidator reports them for unfit conduct and they are subsequently disqualified. In practice, many directors do start new companies immediately after a CVL (sometimes doing the same business). Section 216 of the Insolvency Act 1986 restricts them from reusing the same or similar company name for 5 years, but many work around this. If you suspect phoenix activity, check the directors other active companies.

How do I find out if a company has gone into CVL?

The company status changes to "In Liquidation" at Companies House. A notice is also published in The London Gazette. RecoupIQ monitoring alerts you within 24 hours of any status change, so you know the moment a company you trade with enters liquidation, giving you maximum time to file your claim and investigate.

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UK Insolvency

Creditors Voluntary Liquidation (CVL): What You Will Get Paid and What to Do

A company that owes you money has gone into CVL. The directors chose to wind it up. You will probably recover pennies in the pound, but there are steps you can take now to maximise your position and catch phoenix activity.

Benjamin Child / Unsplash

Average recovery for unsecured creditors in a CVL: 3.2p per £1 owed.

Source: Insolvency Service statistics. Most CVLs pay nothing to unsecured creditors. File your claim anyway (it costs nothing) and check whether the directors are starting again elsewhere.

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Enter the company name or a director name. See the full network: other active companies, historical dissolutions, and phoenix signals.

What to do when your debtor enters CVL

1
File your proof of debt with the liquidator
The liquidator will contact you, but do not wait. Send your claim proactively with all supporting invoices. The earlier you file, the more likely you are included in any distribution.
2
Check if you hold any security or retention of title
If you supplied goods with a retention of title clause, those goods may still be yours. If you hold a personal guarantee from the director, the CVL does not extinguish that. Pursue the guarantee separately.
3
Check the directors' other companies immediately
A CVL is often followed by the directors opening a new company to continue the same business. If they have already incorporated a new entity, this may be a Section 216 breach (reusing a prohibited name) or a transaction at undervalue. RecoupIQ maps all companies connected to the same directors.
4
Attend the creditors' meeting (or vote by proxy)
The liquidator must call a creditors meeting (or decision procedure). Attend if you can. You can vote on the appointment of the liquidator, the basis of their fees, and the formation of a creditors committee. Larger creditors have more votes (proportional to the debt owed).
5
Report director misconduct if you suspect it
If you believe the directors traded while insolvent, took money out before the CVL, or preferred certain creditors over others, report this to the liquidator and to the Insolvency Service (form D1). Directors found guilty of unfit conduct can be disqualified for 2 to 15 years.

Payment priority in a CVL

Fixed charge holders (banks with security on specific assets)

Liquidation costs (liquidator fees, legal fees, administrator costs)

Preferential creditors (employee wages up to £800, holiday pay)

Prescribed part (ring-fenced fund from floating charge realisations, capped at £800,000)

Floating charge holders

Unsecured creditors (trade creditors, suppliers). This is you. Most CVLs do not reach this level.

Shareholders (almost never receive anything in a CVL)

An accountant and a small-business client at a desk, one taking notes — Amy Hirschi / Unsplash

Who uses this guide

Subcontractors owed money by a main contractor

The main contractor enters CVL owing you £40,000 for completed work. You need to file your claim and check whether the directors have already opened a new entity to continue the same contracts.

Suppliers with unpaid invoices

You supplied materials on 30-day terms. The company enters CVL before paying. You need to understand the payment waterfall and whether your retention of title clause gives you priority.

Landlords owed rent

Your tenant company enters CVL owing 3 months of rent. You need to know your position (unsecured creditor unless you hold a charge) and whether the directors will try to take a new lease elsewhere.

Recruitment agencies owed fees

You placed candidates and invoiced. The client enters CVL before paying placement fees. You need to file your claim and check whether they are already trading as a new entity, potentially using the same staff you placed.

Catch them if they start again

Many CVL directors open a new company within weeks. Same trade, same customers, no debt. If you do not monitor them, you will never know. Worse: they may approach you again as a "new" company asking for credit.

Monitor the directors (from £19.99/mo)

Add the directors to your RecoupIQ watchlist. Get alerted the moment they incorporate a new company, become a director elsewhere, or appear on the disqualification register. Available via the web dashboard or the Microsoft 365 Trust Check app (per-seat for your team). RecoupIQ is a Microsoft partner.

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Prevention costs £29. A CVL costs you thousands.

The company that just went into CVL showed warning signs months ago: late filings, director changes, charges filed, gazette notices. RecoupIQ reads 72 signals across 12 data sources and would have flagged it before you extended more credit. Check your other debtors now before the next one goes.

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Related guides

Last reviewed: July 2026. General information for UK creditors. Not legal advice. RecoupIQ Ltd, Company No. 16947526, ICO ZC077511. Microsoft Partner.

What to do when your debtor enters CVL

File your proof of debt with the liquidator

The liquidator will contact you, but do not wait. Send your claim proactively with all supporting invoices. The earlier you file, the more likely you are included in any distribution.

Check if you hold any security or retention of title

If you supplied goods with a retention of title clause, those goods may still be yours. If you hold a personal guarantee from the director, the CVL does not extinguish that. Pursue the guarantee separately.

Check the directors' other companies immediately

A CVL is often followed by the directors opening a new company to continue the same business. If they have already incorporated a new entity, this may be a Section 216 breach (reusing a prohibited name) or a transaction at undervalue. RecoupIQ maps all companies connected to the same directors.

Attend the creditors' meeting (or vote by proxy)

The liquidator must call a creditors meeting (or decision procedure). Attend if you can. You can vote on the appointment of the liquidator, the basis of their fees, and the formation of a creditors committee. Larger creditors have more votes (proportional to the debt owed).

Report director misconduct if you suspect it

If you believe the directors traded while insolvent, took money out before the CVL, or preferred certain creditors over others, report this to the liquidator and to the Insolvency Service (form D1). Directors found guilty of unfit conduct can be disqualified for 2 to 15 years.