A Members’ Voluntary Liquidation (MVL) is a vehicle by which a solvent company can be liquidated.
Most businesses placed into liquidation are in financial distress. A business unable to pay its creditors is typically wound up via a Creditors’ Voluntary Liquidation (CVL).
However, there are other reasons for a company to be brought to a close, such as when it has come to a natural end and the Directors and Shareholders wish to close the business and receive an appropriate share of the company monies following payment of all company debts.
An MVL comes into play when:
- The company has ceased to trade.
- Funds exist to pay all the company’s creditors within 12 month of the start of the liquidation process.
- The company has deregistered or is in the process of deregistering for VAT, PAYE/NIC and Corporation Tax.
- The company has filed or be in the process of completing and filing accounts and returns up to the date the business ceased trading.
- The Directors anticipate surplus funds being left following the payment of the company creditors.
The MVL process begins with the Directors making a sworn declaration that the company is solvent, can pay all its debts and meet all statutory obligations, and appointing a Licensed Insolvency Practitioner. This practitioner then manages the settling of any disputes, the release of company funds and the payment of its creditors. Lastly, they distribute the remaining funds to the company shareholders.
Be aware that an MVL is not the only option for winding down a solvent company. Other options, including an Informal (Voluntary) Strike Off, are available and the right one for you depends on WHY you are choosing to shut down your company.
Be sure to speak to us about the appropriate choice in your particular circumstances.