Benefits of CVL over administration for unsecured creditors
Did you know unsecured creditors in administration can increase their dividend prospects if the company moves into a CVL?
Most of the tasks an administrator / insolvency practitioner (IP) performs in administration can be achieved through a creditors’ voluntary liquidation (CVL).
Furthermore, the CVL procedure usually takes less time and incurs fewer expenses than administration, which lasts at least 12 months.
Generally, CVL is a less costly procedure than administration. Consequently, IPs may use the savings made in moving from administration into CVL to improve the amount distributed to creditors.
But for this to happen, it is essential that creditors act quickly and engage in the administration process. Furthermore, they should authorise WhichIP to act on their behalf through Proxy Instruction.
Regrettably, most people distance themselves from insolvency procedures for 3 main reasons:
- They don’t understand what’s going on
- They have no time to engage with the process
- From previous experience, they assume they’ve lost 95% of their money
Creditor apathy
Creditor apathy usually results in the IP performing duties, and charging fees without scrutiny. Unsurprisingly, this situation does not benefit creditors who are naïve or ill-informed.
If creditors in administration are to improve their dividend prospects, and maintain any level of control, they must:
- Appoint a sympathetic IP
- Hold and attend creditors’ meetings
- Establish and join creditors’ committees
To maximum leverage, creditors should authorise WhichIP to negotiate on their behalf through Proxy Instruction. Our professionals can assist you in replacing an indifferent or inefficient IP. Additionally, they can help to increase dividend prospects at the end of the process.
Contact WhichIP as soon as you are notified of an insolvency procedure. We’ll provide independent advice to help you navigate the process, and recover as much of your money as possible.