Solvent Liquidation

Solvent Liquidation

Members’ Voluntary Liquidation

A solvent liquidation is known as a Members’ Voluntary Liquidation (“MVL”). If you have decided that the time has come to restructure or close your solvent business, and it is able to pay all of its debts, then a MVL may be the right option for you.

There are various scenarios where a MVL will be appropriate:

  • A shareholder may wish to retire, and to take their investment out of the company;
  • The business is a family business, the directors are retiring, and there is no-one to take the business forward;
  • Changes in the market which render the company’s business/services redundant;
  • The company may have been incorporated to carry out a ‘one off’ project, which has been completed;
  • As a tax efficient means for shareholders to extract their ‘capital’

Whilst the company has to be solvent for this process, the services of a Licensed Insolvency Practitioner are required.

A MVL should not be confused with a Creditors Voluntary Liquidation (“CVL”) as creditors have no involvement in an MVL as they will be paid in full. Liquidation is simply the formal process for selling assets and paying liabilities and concludes the affairs of a company to allow it to cease.

A MVL can be converted into a CVL if it transpires that creditors cannot be paid within twelve months. It is, however, a criminal offence to make a statutory declaration without reasonable grounds for believing it to be true.

Briefly the procedure comprises of

  • Declaration of Solvency – A statement of assets and liabilities
  • Appointment of a liquidator
  • Realisation of assets
  • Payment of tax and other creditors
  • Distribution to shareholders
  • Closure

For further advice please contact Dunion & Co. today by calling 01782 828 733 or e-mailing us on

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