What Happens to Business Contracts During a CVL?

When a company enters a Creditors’ Voluntary Liquidation (CVL), its financial position has reached a point where it can no longer continue trading. This naturally raises questions about what happens to existing business contracts, including agreements with suppliers, customers, landlords, and service providers. Understanding how contracts are treated during a CVL can help directors prepare for the process and manage expectations. In most cases, business contracts do not automatically terminate the moment a company enters liquidation. However, the appointment of a liquidator significantly changes how those contracts are handled. Many commercial contracts include insolvency clauses, which allow the other party to terminate the agreement if the company enters liquidation. This means that once a CVL begins, suppliers or service providers may choose to end their contracts immediately.

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