Members' Voluntary Liquidation (MVL)
A company that is solvent (i.e. its assets are greater than its liabilities) can resolve to enter into a Members’ Voluntary Liquidation in order to wind up the affairs of the company. A meeting of the board of directors should be held to propose an Members’ Voluntary Liquidation and this should then be followed by a General Meeting to pass such a resolution.
Unlike in a Creditors’ Voluntary Liquidation, the directors of a company entering into a Members’ Voluntary Liquidation must swear a declaration of solvency to confirm that the company can pay all outstanding debts within 12 months of the MVL commencing.
As the company is solvent, there will be no investigation by the Liquidator into the business and affairs of the company, unless it is found that the company is insolvent. The Liquidator will then place the company into Creditors’ Voluntary Liquidation and investigate accordingly.
In a Members’ Voluntary Liquidation the Liquidator will realise all remaining assets, pay creditors in full and distribute the remaining funds to shareholders.
The Liquidator does not necessarily need to sell all the assets, as long as creditors have been paid in full, then any remaining assets or property can be distributed in specie (i.e. the assets pass directly to the shareholders instead of selling and passing on the cash proceeds).
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