Transforming financial ambiguity into business resilience through a Creditors Voluntary Liquidation

Experiencing overwhelming financial issues can be challenging for any business owner, to the point you feel you need a clean slate and an opportunity to break away from debts weighing you and your business down.

At AVA Advisory, we guide you through the Creditors’ Voluntary Liquidation (CVL) process in an empathetic, genuine, and professional manner. We want to ensure you will be able to face these challenging times confidently and with clarity, meeting your commitments and getting back on your feet.

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What Is a Creditors' Voluntary Liquidation (CVL)?

Navigating insolvency with care

A CVL is an official insolvency proceeding commenced by a company’s directors if the company fails to pay its debts. This helps the winding up of the company’s business to be a relatively straightforward matter in which creditors are fairly managed in relation to outstanding debts, and directors carry out their duties under Section 588G of the Corporations Act 2001.

Is a CVL the right solution for your struggling business?

As Australia battles record-high corporate insolvencies and post-pandemic ATO debt collection, a Creditors’ Voluntary Liquidation (CVL) offers a strategic path forward for businesses facing insurmountable challenges.

With business failures reaching their highest levels in 25 years, CVL provides directors a dignified way to wind up operations while protecting personal interests. Unlike trying to trade through impossible financial circumstances, a properly managed CVL helps shield you from personal liability and offers clarity during an emotionally challenging time.

Our CVL service delivers structured guidance through this difficult transition. With our compassionate expertise, you can navigate the liquidation process with confidence, protect your reputation and position yourself for future opportunities beyond your current business challenges.

Our process pillars

We concentrate on three core pillars of transformation – Improvement, Growth and Support – backed by ongoing advice and performance oversight.

In simple terms, we guide you in running your business more efficiently and sustainably. We work with you to assess the market for your product, develop a growth plan and increase earnings. We parallel these efforts by assisting with back-office management and connecting you with trusted outsourced resources and service providers.

Month-to-month, we help you transform your business and boost daily performance. As Australian businesses navigate some of the toughest operating conditions in decades, we empower you to thrive.

Features and benefits

A Creditor’s Voluntary Liquidation (CVL) allows directors to take control of the insolvency process, ensuring a structured and compliant wind-up of the business. By engaging with creditors transparently and managing debt resolution effectively, a CVL provides closure for all parties while offering directors a responsible path forward.

Structured wind-up process

A CVL provides a structured process to wind up the business, with all legal requirements satisfied.

Creditor engagement

The communication is open with creditors to establish transparency and trust.

Director compliance

By initiating a CVL, directors are making a considered effort to carry out their fiduciary responsibility, potentially reducing their own liability.

Fresh start opportunity

With the completion of a CVL, directors can move on without being weighed down by the burdens of the debts of the insolvent business.

Debt resolution

The debts are paid off in a structured way, and closure is provided to all parties.

Asset realisation

The assets of the company are effectively scanned and sold, and the sale proceeds are passed to the creditors.

Our team’s expertise in Creditors Voluntary Liquidation and achievements

Our team is made up of qualified insolvency practitioners, chartered accountants and industry experts who will guide businesses through the CVL process with sensitivity and professionalism. We have successfully guided hundreds of businesses in a range of industries out of financial distress and into clean wind-ups.

When should a business consider a Creditors Voluntary Liquidation?

The Creditors Voluntary Liquidation (CVL) team at AVA Advisory can assist you if your business is facing the following challenges:

Unable to pay bills when they are due.
Creditors threaten lawsuits or start collections processes.
Operating losses with no genuine opportunity to improve.
Overwhelming tax bills without any realistic plan or ability to pay back the Australian Tax Office (ATO).
Risk of personal liability for company debts.

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When should a business consider a Creditors Voluntary Liquidation?

The Creditors Voluntary Liquidation (CVL) team at AVA Advisory can assist you if your business is facing the following challenges:

Unable to pay bills when they are due.
Creditors threaten lawsuits or start collections processes.
Operating losses with no genuine opportunity to improve.
Overwhelming tax bills without any realistic plan or ability to pay back the Australian Tax Office (ATO).
Risk of personal liability for company debts.

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Regain control with Australia's trusted CVL specialists

A CVL provides a structured way to wind up an insolvent business while ensuring compliance and minimising director liability. Our experts guide you through the process, helping you manage creditor expectations and close with confidence.

Clarity and guidance

Gain a clear understanding of your business’s financial position and the best path forward.

Tailored strategies

Navigate the liquidation process with a structured plan that prioritises compliance and debt resolution.

Clear communication

Maintain open and professional communication with creditors to ensure a fair and efficient wind-up.

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When closure becomes the responsible choice

Sometimes the most courageous decision a business owner can make is recognising when it’s time to close a chapter. We provide a structured, dignified path through CVL, helping you navigate this challenging transition with respect and care.

Over 1 in 4

SMEs say their business is worse off

Than when COVID-19 ended, despite their best efforts to adapt and recover in challenging conditions

25%

Experience serious cash flow difficulties

Making it difficult to meet obligations to creditors, employees and the ATO without formal intervention

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45%

Of SMEs face unsustainable cost increases

Since pre-COVID-19, creating financial pressures that many businesses simply cannot overcome

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Our Creditor’s Voluntary Liquidation process

At AVA Advisory, we provide comprehensive support throughout the Creditor’s Voluntary Liquidation (CVL) process to ensure the best possible outcome for directors and owners.

Initial consultation

(Day 1)

We review your company’s financial situation and walk you through the CVL process.

Resolution to wind up

(Within 7 days)

Directors pass a resolution to voluntarily wind up the company.

Appointment of liquidator

(Day 1)

A registered liquidator is appointed to manage the process.

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Understanding Australian legal standards for Personal Asset Protection

We offer Personal Asset Protection advisory services that are built on a solid understanding of Australian legal standards, such as the Bankruptcy Act and the Corporations Act.

We work closely with business owners, their legal advisers, and accountants so that all asset protection steps follow the relevant laws and regulations, keeping your personal assets safe while staying within legal boundaries.

As Personal Asset Protection advisers, it’s important to us that our clients are familiar with Australian laws and regulations and ensure that personal assets are properly protected. Key considerations include:

Using trust structures to protect assets

A discretionary trust can protect assets from business obligations as trust assets don’t count as part of the estate under the Bankruptcy Act 1966 (Cth). But it is important to make sure the trust is set up in the right way and is not an illusion for the purposes of law.

Application of Personal Property Securities Act 2009 (PPSA)

The PPSA covers personal property security interests. If you register your security interests on the Personal Property Securities Register (PPSR), you are safeguarding your personal property interests against third-party claims. It is a registration that gives priority over unregistered or post-registered interests.

Following guidance from the Corporations Act 2001 (Cth)

This Act lays out the responsibility of directors. Directors who observe these obligations – namely, in good faith and in the best interests of the company – will limit their personal liability exposure. A breach can expose individual assets, so follow-through is critical.

Keeping up to date with the Taxation Administration Act 1953 (Cth)

The Act personalises company directors for taxes owed, such as missing PAYG withholdings and Superannuation Guarantee Charge (SGC) amounts. The directors need to make sure these are paid on time so that they can remain unpunished.

Understanding how the Bankruptcy Act 1966 (Cth) works

This Act explains how individual assets are handled during personal bankruptcy. Some personal assets can be held in trust, which provides a certain level of protection against creditors' claims. However, other assets that become part of the bankruptcy can go to creditors. Using asset protection plans before you run into problems is key as transactions that are made in an attempt to avoid creditors can be revoked (claw-back provisions).

Working with AVA Advisory was a game-changer for our small business. Their expertise and guidance helped us successfully restructure and stabilise our operations, paving the way for financial success. We highly recommend their services.

John Doe

CEO, ABC Company

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“AVA have been able to help guide us in terms of what we’ve needed financially. We’ve also engaged them with legal actions that we’ve wanted to prepare ourselves for.

To know we have that confidence behind us should anything go round or should we need those services is absolutely brilliant.”

Rebecca Kirikino

R&B Mining

“After the initial consultation with AVA, we felt that our issues were completely understood and very quickly our minds were put at ease.

We knew we needed to find a company that could actually communicate with the ATO on our behalf. An incredible amount of pressure was taken off me.”

Kristina Drage

Nabawa Valley Tavern

“All of the AVA team have such great expertise and dealt with everything in so professionally. At no point did we ever feel lost or like they wouldn't be able to assist us.

We highly recommend AVA Advisory because of their expertise and dedication to getting a business where it needs to be.”

Lorraine Judd

LCD Lifestyle Group

“I had massive bad debt standing over my head from our tax bill. The SBR process was painless and easy.

AVA Advisory changed everything for me. Their team did all the work – all I did was answer their questions. They were really good at following up, and communicating things in terminology I could understand.”

Todd Kempton

Locale Kitchen

“AVA Advisory continue to identify any operational or financial exposure that we might have. They’ve been so good at helping us extrapolate to where we want to be, to plan financially, so that we can just really focus on being creative and marketing our business.

We feel like we are in really safe hands.”

Angela Murphy

Happy Film

“We went through the SBR process and negotiated our tax rate down, then came up with a plan to repay a portion of the tax that our company could afford.

AVA Advisory really showed empathy – they understood the situation and adapted it to help us. They just didn't treat us like everybody else.”

Nikki

Arkus Auto Services

Do you need a half-yearly health check?

Our half-yearly health checks are essential for keeping your business on track. Using our diagnostic process, we reassess your position, measure the impact of transformation efforts and monitor performance changes. This allows us to stay ahead of any necessary adjustments, refining your strategy and aligning it with evolving goals.
With flexible mentoring options and check-in points, we tailor the process to fit your needs, ensuring continuous growth and improvement.

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FAQs

Understanding VA is essential for making informed decisions about the future of your business. Below are some of the frequently asked questions about the VA process:

What is a Creditors Voluntary Liquidation (CVL)?

CVL is when the directors of a company take action due to insolvency to wind up the company and distribute the assets to creditors.

What is the difference between CVL and compulsory liquidation?

A CVL is initiated voluntarily by the company's directors, while compulsory liquidation is ordered by the court, usually on the petition of a creditor.

What are the directors’ duties during a CVL?

Directors are required to act in the best interests of creditors, cooperate with the liquidator and provide all information and records in their possession.

Is it possible for a company to continue trading after CVL?

Trading typically ceases upon the commencement of the CVL process, unless under special circumstances when the liquidator feels it is advantageous to creditors.

What happens to employees during a CVL?

Employees are generally dismissed but may be able to claim lost wages and entitlements under government schemes.

What’s the duration of the CVL process?

It can take anywhere from a few months to more than a year, depending on the complexity of the company’s business.

Does a CVL affect my personal credit rating?

A CVL has an impact on the creditworthiness of the company, not the directors’ personal creditworthiness, unless personal guarantees are involved.

Are directors personally liable for company liabilities in CVL?

Unless the director has given personal guarantees or conducted unlawful trading, directors do not generally face personal liability.

Why does A CVL need a Liquidator?

The liquidator manages the winding-up, sells assets, reimburses creditors, and keeps the company in line with Australian law.

Can a company be revived after a CVL?

After liquidation and deregistration, a company cannot be restored or revived.

What is “Phoenixing”?

Phoenixing is the process in which the directors of an insolvent company set up a new company to continue the same business operations using the same assets, but not with the company's debts. This can be an acceptable method to keep a viable operation open and safeguard jobs. However, if it is being used to knowingly avoid paying debt, taxes, or employee benefits, it is illegal and referred to as "illegal phoenix activity". This harms creditors, workers, and the economy at large.

In Australia, regulators such as the Australian Securities and Investments Commission (ASIC) and the Australian Taxation Office (ATO) actively track and investigate illicit Phoenix activity in order to protect stakeholders and maintain legitimate trade.

Need more information?

Contact our team for a confidential discussion.

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Meet our team

Our dedicated team of industry experts bring a wealth of knowledge and experience, from debt management and business transformation to high-level corporate advisory. Guided by integrity and trust, we are vibrant and future-focused, with a commitment to professional and financial excellence.