In short
The short answer
- A CVL winds up an insolvent company through a registered liquidator appointed by the company itself, rather than by the court on a creditor’s application.
- The liquidator realises assets, investigates the company’s affairs and distributes available funds to creditors in the order the law sets out.
- Australian Financial Advisory explains what the process means for you, sets out the options in writing, and introduces a registered liquidator. We do not act as the liquidator.
When it is used
When is a creditors voluntary liquidation used?
A CVL is used when a company is insolvent and cannot continue trading viably.
Insolvency
The company cannot pay its debts as they fall due, or its liabilities exceed its assets.
No viable future
The business has no reasonable prospect of returning to profitability.
Director decision
The directors recognise the need for an orderly wind-up to minimise further losses.
The process
How a creditors voluntary liquidation runs
Initial assessment
The company’s financial position is reviewed and the suitability of a CVL considered.
Director and member resolutions
The directors and members resolve to wind up the company and appoint a registered liquidator.
Creditors informed
Creditors are notified and may confirm the appointment or nominate an alternative liquidator.
Asset realisation and investigation
The liquidator realises the company’s assets and investigates its affairs, including the conduct of directors.
Distribution
Available funds are distributed to creditors in the order the law sets out.
Deregistration
The company is deregistered and removed from ASIC’s records.
What it provides
What a creditors voluntary liquidation is designed to do
- An orderly wind-up of the company’s affairs
- A registered liquidator deals with creditors on the company’s behalf
- Legal requirements of the wind-up handled by the liquidator
- An end to further trading losses
- A clear, documented record of what happened
Insolvent trading
Director responsibilities
Directors have a duty to prevent insolvent trading. Once a company becomes insolvent, continuing to trade can result in personal liability for directors for debts incurred during that period. Taking advice early helps a director understand this risk and the duties under the Corporations Act.
Our role
What Australian Financial Advisory can and cannot do
We can
- Explain what a creditors voluntary liquidation would mean for you and your company.
- Set out liquidation alongside the other options in writing.
- Introduce a registered liquidator from our network.
We do not
- Act as the liquidator or accept any appointment.
- Determine whether the company is solvent or insolvent. We can prepare a cash-flow projection from your figures.
- Give legal advice or promise a particular outcome.
Common questions
Creditors voluntary liquidation questions
Who carries out a creditors voluntary liquidation?
A registered liquidator. Australian Financial Advisory is not a registered liquidator and does not accept appointments. We explain the process and introduce a registered liquidator from our network.
Does liquidation end a Director Penalty Notice liability?
Not always. For a non-lockdown DPN, commencing liquidation within the 21-day window is one of the ways the penalty can be dealt with. Liquidation does not remove personal liability for a lockdown DPN.
Do you charge for the first conversation?
No, the initial consultation is free.
The information on this page is general in nature and does not constitute legal, financial, taxation, or insolvency advice. Australian Financial Advisory Pty Ltd provides assessment and advisory services only. All specialist services are referred to appropriately licensed partners. You should seek independent professional advice before acting on any information on this page.
Content last updated: 2 October 2026.
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