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A CVL is initiated by the directors of the company. They will hold a board meeting where an IP is appointed to assist them with the formalities for placing the company into liquidation.

The first of these formalities is a shareholders’ meeting, which usually takes place within one or two weeks of the initial board meeting. At this meeting the liquidation formally begins, and a liquidator is appointed.

The second technical step involves giving creditors the opportunity either to ratify or replace the liquidator chosen by the shareholders. This part of the process can be done in several different ways, but it is typically done by a virtual meeting (a conference or video call), which takes place shortly after the shareholders meeting.

This gives creditors the opportunity to ask questions about events leading up to the liquidation and, if they wish, to replace the liquidator appointed by the shareholders with a different liquidator. The creditors meeting may also be asked to approve an estimate of the liquidator’s fees.