Corporate Insolvency Processes /RSM Gibraltar

Corporate insolvency, while not ideal, is far from the end of the world.

Corporate insolvency occurs when a company cannot pay its debts as they fall due – often due to circumstances beyond the control of Directors and Shareholders alike. At RSM, we have experience in a range of Corporate Insolvency Processes, and we will work with you to assess the most appropriate strategy for your company.

Where closure is the right option, a Creditors Voluntary Liquidation (“CVL”) can provide protection from personal liability.

Should you need a Liquidator to act for a Compulsory Liquidation (also known as a Court-Ordered Liquidation) we also have experience in the same.

So, whatever the circumstances, our team will guide you throughout the process.

Creditors Voluntary Liquidation (“CVL”)

If you are facing increasing pressure from creditors, or if it has become clear that the company no longer has a viable future, a CVL may be the most appropriate course of action.

A CVL is an insolvent liquidation process in which the Directors appoint a licensed Insolvency Practitioner. Our Insolvency Practitioners will then manage the orderly wind‑up of the company, realising its assets and distributing the proceeds to creditors in accordance with statute.

There are a few reasons as to why Directors may propose a CVL such as:

the company is Insolvent and there is no chance of recovery.
overwhelming pressure from creditors such as the ITO, or suppliers.
to avoid Compulsory Liquidation.
to control when the entity enters liquidation and who will be appointed Liquidator.
much more we can discuss with you.

When a company is deemed to be insolvent, a Director has additional duties which they must comply with. Failure to do so may result in wrongful trading allegations. It is therefore essential that professional advice is obtained from an Insolvency Practitioner.

Allow our experienced Insolvency Practitioners to assist you with independent professional advice early, so that we may help you decide the best possible strategies for your company.

Compulsory Liquidation also known as Court-Ordered Liquidation

Compulsory Liquidation (also known as a Court-Ordered Liquidation) is when Creditors take legal action to reclaim any debts outstanding. The Court will take control of the company and its assets and liquidate them to repay these debts. It is the least desirable of the corporate insolvency processes as Directors may be viewed as committing misfeasance by failing to act at the appropriate time and will be investigated on the same.

A company may be placed into Compulsory Liquidation for several reasons, including:

the company is insolvent and unable to pay its debts as they fall due.
a creditor or other interested party has presented a petition for the winding up of the company.

Before matters reach this stage, it is strongly advisable to seek professional advice, as alternative insolvency or restructuring options may be available.

We have extensive experience advising on Compulsory Liquidations and related insolvency matters. We are available to discuss concerns with Directors facing financial distress or to assist petitioners seeking the appointment of a Liquidator.