CVA Pre Pack or Phoenixing Administration Liquidation
Voluntary Winding up (Compulsory)
MVL CVL
Cost of solution Fees taken out of regular monthly payments made by the company. Lump sum required to buy assets of old business depending on its value. Administrators fees taken from company funds or sale of company assets Minimum liquidator's fees £4700 normally paid by the company Minimum liquidator's fees £4700 normally paid by the directors No charge to the company or directors
Debt collection activities and payment to creditors Stops once CVA is in place. Court action and winding up procedures stopped Collection activities stop as new company can not be pursued for outstanding debt Any pending winding-up petitions will be dismissed or suspended Continue as normal until company is closed Continue as normal until company is closed Continue as normal until company is closed
Debt repayment (Including HMRC) Normal creditor payments stop. Creditors are paid a percentage of what they are owed Creditor payments stop. Old company is liquidated and debts are then paid proportionally as much as possible after liquidator's fee Some creditors may be paid. The administrator acts in the best interest of the company creditors Any outstanding creditors will be fully paid from the assets of the company Creditors will be paid from the assets of the company if money is available. Part payment or non payment normal Creditors will be paid from the assets of the company if money is available. Part payment or non payment normal
Duration Usually 5 years n/a Maximum 12 months, exceptionally extended to 15 months Up to 12 months from the start of the winding-up n/a n/a
Confidentiality Private agreement. Not announced publicly Administration and liquidation of old business advertised in the London Gazette Announced publicly in the London Gazette. Company must also advertise that it is in administration on all correspondence The special resolution for voluntary winding-up of the company must be published in the Gazette Unless the court directs other arrangements, the petition must be advertised in the Gazette
Effect on the Company Company continues to trade normally A new company is formed which buys the assets of the old. The new company continues to trade. The old business is normally liquidated Company continues to trade under the management of the administrator. A CVA may then be implemented or the company liquidated Company is closed Company is closed Company is closed
Effect on Directors Directors remain unaffected Directors take up roles in new company. A directors report is issued by the liquidator of the old business The administrator takes over control of the company. The directors can not act without the authority of the administrator Directors are not affected and resign voluntarily at the end of liquidation Directors resign. If accused of wrongful trading, they may be disqualified and liable for certain debts Directors resign. If accused of wrongful trading, they may be disqualified and liable for certain debts
Control of the company The existing directors continue to control the company The new company is controlled by its new directors. The old company is controlled by the liquidator The company is managed and controlled by the administrator The existing directors and managers control the company Controlled by the liquidator Controlled by the liquidator
Effect on employees Employees remain unaffected Employees working for the old company must be transferred to the new business under TUPE law Employees may be retained or made redundant by the administrator. Employees are made redundant Employees are made redundant Employees are made redundant
Effect on Shareholders Status of shareholders is not affected Old business is normally liquidated and shares become worthless Status of shareholders is not affected Receive remaining assets of the business after all creditors are paid Old business is normally liquidated and shares become worthless Old business is normally liquidated and shares become worthless
What happens to company assets? Not affected Sold to new company at a market price May remain with the company or be sold depending on the decisions made by the administrator Once creditors are paid, outstanding assets or cash is given to the shareholders" Sold and/or transferred in favour of creditors. Sold and/or transferred in favour of creditors.