Creditors’ Voluntary Liquidation (CVL) of Mental Health Service Charity

The mental health service Charity employed 50 employees with a varied set of qualifications and practical skills in the care and mental health industry. The Charity provided support, advocacy, and advice to individuals of all age groups experiencing mental distress and extended these services to their families and carers. The Charity also provided representation services to mental health service users.

Work Undertaken

The directors attributed the failure of the Charity to a lack of operational leadership, control and financial management.

Two core elements contributed to the collapse of the Charity which were identified as a lack of full cost recovery on the contracts which pushed the Charity out of pocket.

The VAT liability being imposed on the Charity also contributed to the financial distress encountered. The Charity had experienced ongoing technical issues around VAT liabilities, including under-declaration and partial exemption.

Outcome

We provided insolvency advice and undertook the Creditors’ Voluntary Liquidation of the mental health Charity as it was no longer viable and could not be recovered.

Our main focus was on supporting the Charity in conjunction with the service commissioners and local authority social services.

We needed to handle the transfer of the remaining services, including a large number of potentially vulnerable clients, with meticulous care to minimise disruption and ensure service continuity.