A Members Voluntary Liquidation might be an appropriate process when a company is solvent and has assets.
The MVL provides a greater degree of certainty than some other procedures and can be a useful tool in helping Restart BTi to assist you to re-structure your business. A licensed Insolvency Practitioner will manage the process and ongoing liability only lasts until dissolution.
This type of liquidation is sometimes favourable in the event of a breakdown in the relationship between directors or partners, or because changes in the market have made the company no longer viable, or when directors or partners wish to retire. An MVL could enable members to extract their investment from a company in a co-ordinated manner in order to benefit from effective tax planning.
The directors would be required to produce a schedule of assets and liabilities (a Declaration of Solvency) which states that all the company’s debts will be paid in full within twelve months of the date of the liquidation.
In order to pass the resolutions to wind the company up and appoint a Liquidator, the directors pass resolutions at a Board meeting and the members attend an Extraordinary General Meeting. At this point the company would cease trading if it had not already done so.
All assets of the company, including book debts, are realised and proceeds of these used to fund the cost of the Liquidation. Any excess funds are made available as a dividend to creditors, payable by order of priority. A dividend would be paid to members after the unsecured creditors had been paid in full, plus interest. A final meeting would be summoned by the Liquidator when their duties had been completed and the company would then be dissolved three months after the final meeting.