Members Voluntary Liquidation
A Members Voluntary Liquidation (otherwise known as a Solvent Liquidation) is used when a company is solvent and does have the ability to pay its liabilities in full, along with statutory interest and the costs involved with winding up the company.
An MVL can be used when a company has come to the end of its life for a variety of reasons, and needs to be wound up. For example, the business owners and operators may want to retire and wish to convert the company assets into their own private assets. It can also be used where the directors of the company have decided they can no longer work together, entering liquidation and dividing the assets between them.
If a company is to initiate an MVL it must make a declaration of solvency 5 weeks before a resolution to dissolve the company is passed. As well as outlining the intention to pay debts within 12 months, the declaration is required to outline details of the company’s assets and liabilities.
A general meeting of the company needs to be held by the shareholders that passes a resolution for voluntary winding up and appoints liquidators.
It is not appropriate for a company that is insolvent to use an MVL. If a company declares themselves as solvent without having the ability to pay creditors and debts, this is a criminal offence.
If the liquidator decides that a company’s debts cannot be paid within the agreed time period, an MVL must be converted into a CVL. This process is initiated by the meeting of the creditors and company representatives, which is required to be carried out within 28 days. From the date of the meeting onwards, the MVL becomes a CVL.
If you want to know about Members Voluntary Liquidation, contact BRS on 0845 468 2395 or fill out our contact form.
