A members voluntary liquidation can only start when the directors of a company have reviewed the company’s financial situation and are confident that the company is solvent, and that it will be able to repay all of its debts, including statutory interest, within no longer than 12 months.
A statutory declaration of solvency to this effect must be sworn under oath by the directors of the company. The company will then have a maximum of 5 weeks to pass a resolution to wind the company up using the members voluntary liquidation process. Once the company has passed the resolution to wind up, then that resolution should also be filed with the Registrar of Companies within a maximum of 15 days, together with the declaration of solvency.
From the time they have decided to go into members voluntary liquidation, the company directors will have already teed up a liquidator to act for the company, who must be a licensed insolvency practitioner. The liquidator will be appointed by the company to be the liquidator as soon as the resolution of the company to liquidate is passed.
The liquidator then has certain duties and tasks, one being that not later than 28 days from their appointment, they must provide notice of the appointment to the known creditors of the company.
How long the actual process of liquidation takes will very much be dependent on:-
- the type of company
- the number of creditors
- the number of shareholders
- what assets there are, where they are, and how easy they are to sell
- how many bank accounts, mortgages, charges etc to deal with
- whether there are leases or land ownership in the company’s name that will need to be dealt with.
- the employee situation
- if there is a pension scheme to deal with
- what contracts and obligations and third party guarantees and security etc there may be.
Therefore, how long the members voluntary liquidation will take is very dependent on the particular circumstances of the company involved.
It will inevitably speed up the process if the directors and members are cooperative and if they provide the liquidator with as much information as possible upfront. If there are any disputes amongst shareholders this will increase the time, as will the creditors position. However, members voluntary liquidation is usually the least complicated voluntary liquidation process available and it is likely to be finalised quicker than other similar insolvency procedures.
Our expert team of liquidation specialists at Francis Wilks & Jones act for companies and insolvency practitioners in members voluntary liquidations on a daily basis, and have a vast experience of knowledge of this procedure. Contact us to find out how the process might work for company, and to obtain further guidance on how this might work for you.