What Happens if There is a Directors’ Dispute in a CVL?

Unsurprisingly, director’s disputes are common in insolvency cases. When a company has failed or appears to be failing, it is all too easy for directors to hold differing views that become difficult to resolve as financial tensions mount.

These situations create a complicated array of legal issues which can vary widely as per the individual situation. Before attempting to resolve any of these, you should gather any relevant articles of association, directors service agreements, shareholder agreements, and the accounts from the last three years. This documentation will be essential if any third party is to mediate.

Commercial Mediation Would be a wise Choice

Although potential costs may be offputting to a company already facing insolvency, using an experienced mediator is always a wise choice. If parties are unable to find a solution amicably and are locked in deadlock, it may be the prudent solution to move the company forward.

A Means of Closing the Company Efficiently

Where there is a deadlock between directors or shareholders and directors of a Company, a CVL  could be used to break the deadlock and resolve the issues. The difficulty here is that it needs the agreement of first the directors and 75% Shareholders to take place. Assuming this is achievable, a CVL could provide a convenient way of breaking up the company assets and close the company efficiently.

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