What denotes a Creditors Voluntary Liquidation?

In a Creditors Voluntary Liquidation (CVL), the process is initiated by the company's directors when they recognize that the company is unable to pay its debts. The distinguishing characteristic of a CVL is that a liquidator is appointed specifically to manage the liquidation and is usually chosen by the creditors.

The correct response highlights that a court-appointed liquidator sells the assets of the company. However, in a CVL, while the process often involves the creditors appointing the liquidator, the emphasis is on the voluntary aspect of the liquidation initiated by the company's shareholders due to insolvency. The assets are then sold off by the liquidator to pay creditors, which aligns with the nature of the CVL, where liquidation serves the interests of the creditors.

The other choices do not align with the definition of a Creditors Voluntary Liquidation. Shareholders making all decisions can occur, but liquidators and creditors play a pivotal role in the liquidation after the decision is made. The statement regarding mandatory requirements is inaccurate, as CVLs are voluntary, not obligatory. Lastly, distributing funds evenly among all stakeholders does not typically occur; instead, distribution follows the priority of claims established by insolvency law, where creditors are paid first in a hierarchy.