Solvent Liquidation

What happens with a Solvent Liquidation?

This is when your company is solvent, but you and your fellow directors wish to cease trading and wind up the company.  It works by realising all the assets, using these funds to pay off the creditors and return the remaining funds as shareholders’ capital. First of all you should know that Insolvency Practitioners will refer to these as Members' Voluntary Liquidations or MVLs.

How an MVL works 

• A majority of your directors produce and sign a declaration which confirms that, they will, within 12 months, be able to pay off its debts in full. This is called a ‘declaration of solvency’.
• They put their decision to the shareholders who vote on whether to proceed with the MVL. The shareholders then appoint an insolvency practitioner to be the liquidator.
• Our responsibility is to
  • realise the assets
  • agree creditors’ claims
  • distribute funds owed to the creditors
  • pay any surplus funds to the shareholders.
• If we discover that your company won’t be able to pay all its debts, we’ll have to set up a ‘decision procedure’ and convert the MVL into a Creditors’ Voluntary Liquidation. 

Whilst a solvent liquidation is a process, we know we can add value to that process. In the weeks and months before putting your business into a solvent liquidation, we’ll work with you to set out a clear process for bringing your business to a close.

Our fee

Clearly, the cost of the liquidation process is important. We’ll be open and fair about the cost to you, which we’ll often apply on a fixed fee basis.