Members Voluntary Liquidation
What
is it?
Voluntary Liquidation can be subdivided into Members' Voluntary Liquidation ("MVL"), where the company is solvent and Creditors' Voluntary Liquidation ("CVL") where the company is insolvent.
MVL involves the directors swearing a statement, known as a declaration of solvency, to say the company will be able to pay all its debts within a period not exceeding twelve months.
Who is it for?
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The Process
The directors of the company swear a declaration of solvency and by way of a Special Resolution the shareholders of the company resolve to place the company into liquidation and appoint a liquidator. The declaration of solvency must state that the directors of the company have conducted a full enquiry of the company's affairs and have formed the opinion that it will be able to pay its debts with interest at the official rate within a period not exceeding 12 months. The special resolution to place the company into liquidation requires the approval of 75% of shareholders' votes. If the assets realise insufficient to pay creditors in full then the liquidation is converted into a CVL.
Advantages
- The liquidator winds up the company minimising risk to shareholders
- There can be tax benefits in considering an MVL
Disadvantages
- The control of the company's assets passes to an Insolvency Practitioner. It is important to select your insolvency practitioner carefully
Other Options available
Informal Creditor Agreement , Company Voluntary Arrangement (CVA) , Administration , Striking-off procedure under the terms of the Companies Act
Call us on 0800 195 4585 to see if we can be of any assistance regarding 'Members Voluntary Liquidation'.
