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There are three different types of Liquidation.

The first type of Liquidation is a Creditors Voluntary Liquidation, or CVL for short. This is where the Directors of a company have formed the opinion that the company is insolvent, creditors are piling up, it has no cash left and it cannot continue to trade. With this type of Liquidation the Directors make the initial contact with the Insolvency Practitioner that they wish to take advice from and want to carry out the work of the Liquidation.

The second type of Liquidation is a Compulsory Liquidation. This type of Liquidation is usually initiated by a creditor that hasn’t been paid. This is where the creditor has asked the courts to get involved and they ask the court to wind up the company. With a Compulsory Liquidation usually the Official Receiver (OR), who is the Government’s Liquidator, would undertake the Liquidation process.

The third type of Liquidation is a Member’s Voluntary Liquidation, or MVL for short. Now, this is the positive type of Liquidation where the company is solvent and just reached the end of its life. Therefore the Directors wish for an Insolvency Practitioner to place the company into a solvent Liquidation. This type of Liquidation is often used for the shareholders to be able to extract their cash from the company in a more tax efficient way.

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