A Members Voluntary Liquidation (MVL) is the formal procedure for winding up and liquidating a ‘Solvent’ company. This means that the company has sufficient assets to cover its debts and everyone will be paid in full, with any remaining funds distributed to shareholders. As the company is solvent entering into MVL is voluntary.

Because the process is voluntary and the business is solvent, the process is often relatively straightforward and often costs less than a creditor’s liquidation. When a company is ‘dissolved’ through Companies House it is often a forgotten fact that a creditor could apply to have the company restored within a period of 20yrs from dissolution, however this is not the case if the company is closed through Members Voluntary Liquidation.

MVL Benefits

  • Provides a potential tax efficient exit route to shareholders (see below).
  • Provide a managed exit as the shareholders control the process.
  • Useful for shareholders who are considering retirement.
  • Closure of a company when it has come to the end of the project it was formed for.
  • Enables a group of companies to close down a subsidiary which is no longer required.

MVL Process

Firstly, the Directors must make a ‘Declaration of Solvency’ which states that the company is solvent and is able to repay its debts together with statutory interest within 12 months.

Once the Declaration of Solvency has been made, a meeting of the shareholders is called to pass the necessary resolutions and appoint a liquidator.

An authorised Insolvency Practitioner must be appointed as the liquidator and it is their role to realise all the assets of the company and distribute to creditors in the correct order.

Following settlement of all the companies’ debts, the Liquidator will then distribute the remaining funds between the shareholders.

If, during the course of an MVL, the liquidator finds that the company will be unable to pay its debts in full within the period stated in the Declaration of Solvency, he must call a meeting of creditors to take place not later than 28 days after the day on which he formed the opinion. The process is then converted to a ‘Creditors Voluntary Liquidation (‘CVL’)

mvl processes

Take the next step

  • Call us direct on 01257 257030 and ask to speak to a specialist on Members Voluntary Liquidations. You can see our biographies here and ask for someone direct if you like.
  • We will discuss the company position: current trading, cash flow, assets, liabilities and about your employees in clear terms you can understand.
  • We will introduce you to a Tax Specialist if required.
  • We will arrange a meeting to put the company in liquidation.
  • You will be under the guidance of Licensed Insolvency Specialists, who act as officers of the court and trusted Professionals.
  • Once all creditors have been paid you will receive your capital distribution.
  • If you just prefer some generic advice then sign up to our newsletter here and we will send you useful information and guidance on Insolvency and finance options without having to speak to anyone until you are ready.
take next steps

Focus Insolvency Group specialises in helping company directors to find solutions to their company debt problems. Call us today on 01257 257 030.

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Anthony Fisher MIPA, FABRP, Gary Birchall MIPA, FABRP and Jane Hardy MIPA are licensed to act as Insolvency Practitioners in the UK by the Insolvency Practitioners Association. Focus Insolvency Group is a trading style of Debtfocus Business Recovery & Insolvency Limited.

Registered in England & Wales Company Number 6831646. VAT Number: 905 2306 58.

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