When a company becomes insolvent, a meeting of creditors is often called to explain why the business has failed and/or to vote on the next proposed step. Here we look at several routes into insolvency, and see how the meeting of creditors is handled during each process.
When a company is being pursued by creditors intent on winding it up, a Creditors’ Voluntary Liquidation can be the best solution for a seemingly untenable situation. A CVL is a director-initiated process rather than a court-ordered compulsory liquidation.
Creditors are given time to consider the CVA proposal prior to their meeting, which usually takes place at the same time as a meeting of members.
The initial meeting of creditors must be called within 10 weeks of an administration order, with a minimum of 14 days’ notice being required.
The initial meeting of creditors during a compulsory winding-up procedure involves voting on whether to appoint a liquidator of their choice, and also voting in a liquidation committee. A simple majority vote is all that is required in these cases.
A final meeting of the company and its creditors is called at the end of proceedings, to present the final accounts in liquidation and in the case of compulsory winding-up, to allow voting on whether to release the liquidator from office.
Begbies Traynor offers professional guidance on all of the above insolvency proceedings across our nationwide network of offices
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