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The Working of A Creditors Voluntary Liquidation

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Simple Liquidation
The Working of A Creditors Voluntary Liquidation

A CVL is a formal procedure for insolvent limited companies that are winding up the business due to debt. Because it’s voluntary, the directors of the company have chosen to close the business, usually after all other attempts to save the business have failed. To decide whether a company is considered insolvent, there are two predominant tests to carry out – the cash flow test and the balance sheet test. The cash flow test is when the company is not able to meet its liabilities when they fall due. The balance sheet test shows that the company’s liabilities are greater than its assets.

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