HomeFWJ TakeawayCompany rescueMembers voluntary liquidationWhat is a MVL – members voluntary liquidation

Unlike other methods of liquidation, a members voluntary liquidation can only be used by a solvent company. It is usually brought by the members of a company who want to end the business in an effective and orderly manner, but it is not appropriate simply to apply to the Companies Register to be struck off.

A members voluntary liquidation is commenced by the members, and the directors of that company must swear a declaration of solvency confirming that the company is able to pay all of its debts in full within 12 months at the latest. If the directors knowingly make a false declaration of solvency, this can have serious personal consequences for the directors, and will mean that the members voluntary liquidation must convert to a creditors voluntary liquidation.

Members voluntary liquidation – the voluntary liquidation process

Once a liquidation of a company has commenced in a members voluntary liquidation, the liquidation process is much the same as with insolvent liquidations. A liquidator is appointed whose role is to collect in the company’s assets, liquidate assets, distribute the proceeds and terminate the company.

  • once a liquidator is appointed, then the directors’ powers end and the liquidator deals with all company matters during the voluntary liquidation process.
  • the liquidator will inevitably bring liquidation sales in order to liquidate assets of the company.
  • once the proceeds of sale have been received by the liquidator, the voluntary liquidation process means that the liquidator will distribute the proceeds of the assets in the liquidation of the company. She/he will first pay any creditors that are still outstanding, before applying the proceeds of liquidation sales for the members who will be paid in accordance with their shareholding.

It is hoped that a members voluntary liquidation will be a quick and efficient way of winding down a company. However, if the liquidation has to take longer than a year, a liquidator must file an annual report for creditors and members of the company in order to update them on the progress of the liquidation of the company.

If you wish to place your company into members voluntary liquidation as an efficient method of ending your company, speak to our company members voluntary liquidation experts today to discuss how to take this forward.

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