Members’ Voluntary Liquidation (MVL)

MVLs are a solvent liquidation, rather than an insolvent liquidation. In other words, there should be sufficient funds to pay creditors of the company within 12 months of the Company entering liquidation.

If you wish to get a head start on the Insolvency Practitioners, an up-to-date list of the assets and their values as well as details of any creditors is useful. If you have not already done so, then it is a good time to speak with your accountant as they will need to file a final return once the Company is in liquidation.

The process of putting the Company into liquidation itself can vary and is very much driven by how quickly you would like the company to be placed into liquidation. Most MVLs can be completed within six to nine months, however, this would depend on the complexities of the case. It is not unheard of for some MVLs to last over 12 months.

Once the liquidation is completed, the company is dissolved three months after the liquidator sends their final report to the shareholders and then files this at Companies House.

Assets such as property, cars, and Picasso paintings can all be transferred in specie. Meaning, they are distributed to the shareholders as they are. This can also be done for things such as director loan accounts.

This would be done upon agreement with the shareholders, and it is important that you obtain your own tax advice to understand the implications of an in specie distribution.

For example, if you have a property or car in the name of the company that you would like to keep once the company is dissolved, this does not have to be turned into cash.

Yes, however, if the value of the assets in your company is below £25,000 then you may benefit from a voluntary strike off at Companies House. This does not need to involve an insolvency practitioner as distributions below this threshold will generally be treated as capital gains and, therefore, may qualify for Business Asset Disposal Relief.

If you are unsure as to whether you would qualify for this, we would be happy to speak with you and there is ample guidance available at Companies House which you can find using the following link Strike off your limited company from the Companies Register: Overview – GOV.UK

This will depend on the nature and complexity of the liquidation. The normal process is that creditors should be paid and that the advertisement for claims, which has a statutory minimum notice period of 28 days, has expired. It is possible for a liquidator to make an earlier distribution, but this would be subject to indemnities and ensuring that sufficient funds are retained to meet any anticipated liabilities.

The Declaration of Solvency is a legal requirement for putting a company into an MVL and it carries criminal penalties for making a false declaration. It is a declaration that accompanies a statement of the Company’s assets and liabilities which all, or a majority of, the directors make before a solicitor (or a commissioner of oaths). Put simply, it is a declaration that the Company is solvent and can pay all its creditors within 12 months.

We can assist you with putting together the declaration and the accompanying statement of assets and liabilities.

The directors of the company must keep the records of the company for 12 months after the Company has been dissolved. The Liquidator will hold their records for six years after the company is dissolved.

We’re always only a phone call away!

The reality though is that you should not need to contact us much at all once the company is in liquidation. The Liquidator will deal with the affairs of the Company and obtain the necessary confirmations from HM Revenue and Customs that there are no further liabilities. Usually, the only times you will need to hear from us are when we are declaring a distribution to the shareholders or writing to let you know that the liquidation is concluded.