Good Reasons to Consider Creditor’s Voluntary Liquidation

Liquidation is not a great experience with anyone involved with the business that is going to get closed. Nonetheless, taking advice from reliable Insolvency Experts can help to minimize the losses and stresses in this challenging and crushing period.

Closing a business is not advantageous in any way, especially when the company is trapped under outstanding debts. You are unsure whether to allow creditors forcefully initiate a compulsory liquidation with filing a wind-up petition and getting an approval. Alternatively, Creditor’s Voluntary Liquidations [CVLs] can be a good option, when compared to less pleasant compulsory wind up form.

In a voluntary liquidation, the directors are willing to apply for closing the insolvent company. There are some good reasons to consider CVL rather than wait for involuntary or compulsory liquidation.


As you are going to initiate a CVL means you are prepared to wind up. You get more time to streamline the wind-up activities and plan how to minimize the losses. While in compulsory liquidation, you will be forced to close within a few weeks. You are exposed to unnecessary losses and probable misconduct allegations.


In CVL, company directors can choose the liquidator as opposed to compulsory liquidation. The court appoints an official reviewer or the creditors hire an insolvency practitioner. You get to hire means an opportunity to research and identify a liquidator you are comfortable with. It makes a huge difference in navigating through the liquidation process.


Post liquidation, the liquidator needs to perform a thorough search to find out whether any directors were guilty of fraudulent trade activities or not. If you take an initiative to enter CVL then you get guidance from ASIC certified insolvency practitioner, so you will be totally prepared for such accusations.

Satisfied creditors

In CVL, the directors get an opportunity to explain the company affairs with creditors in a meeting. It may reassure and satisfy the creditors thus preventing them from making allegations against the company directors.

Alternatively, in compulsory liquidation, the creditors initiate the process. They pay huge fees to pull you in court, so they are more likely to make accusations of fraud activities that have brought the company on the edge of going insolvent.

Official receiver’s investigation

In compulsory liquidation, the directors will undergo long questioning and cross-examining sessions with the court-appointed official reviewer.

Protection from personal liabilities

Choosing a CVL option means the directors are familiar with the insolvency status and are taking steps to ensure that the creditors’ best interest get fulfilled. It helps to prevent you from being personally liable to pay the debt, which would be the case if you didn’t stop trading.

Chance to buy assets

In the initial consultation with Insolvency Experts, you get a chance to discuss many options. The company directors can purchase some business assets. It is called ‘pre-packaged asset sale’. You can use these assets in your new business to simplify the start-up challenge.

The pre-packaged asset sale is possible even in compulsory liquidation but is hard to arrange. The process takes a very long time.

Timing and cost

CVL process takes less than one month, while compulsory liquidation takes several months. In compulsory liquidation, the processing fees are to be paid to the state secretary, so the cost is high and creditors receive a lower share.