The key difference between a CL and a CVL is that a CL is driven by a creditor, or a number of creditors – not the directors. The creditor, often HM Revenue and Customs, will issue a winding up petition and serve it at the company's registered address.
In practice, the service of the petition can have a devastating effect. The petition is advertised in the London Gazette – the company's bankers will become aware of this and may well freeze the company bank account. In practice, this is most likely to put the company out of business.
The court hearing of the petition will take place approximately 6 weeks after the issue of the petition. Once the hearing takes place it is likely that a winding up order will be made. The Official Receiver (OR) - a civil servant will be appointed Liquidator. Creditors must be notified within 12 weeks. Creditors will also be advised whether the OR thinks it necessary to call a meeting of the company's creditors. An Insolvency Practitioner will be appointed by the creditors at the creditors' meeting or through a Secretary of State appointment where the OR will liaise between the major creditors and the Insolvency Practitioner of their choice.
The OR will carry out the investigation into the conduct of the directors and subsequent report to the DTI.
Should a winding up petition have been issued this CL procedure will take precedence over the CVL procedure.