MVL

Summary

The solvent liquidation process where tax-efficient distributions are made to shareholders after all creditors are paid in full.

Suitability

• Company must ensure all debts plus interest can be paid in full within 12 months

Process

• Directors make a formal declaration of solvency
• Resolutions passed at a general meeting of the shareholders (or by written resolution) to wind up the company and appoint a liquidator.
• Liquidator realises remaining assets, pays creditors in full and distributes remaining funds to shareholders

Directors Risk

• Once the company ceases to exist, there is no recourse to shareholders or directors.

Limitation Period to Restore

• 6 years except for personal injury proceedings where there is no limit

Cost

• Varies depending upon the number of companies

Pros

• Qualified Insolvency Practitioner acts as Liquidator
• Liquidator agrees or rejects creditors’ claims including contingent claims which protects distributions to shareholders
• Distributions are treated as a capital return
• Distributions to shareholders are protected from being challenged as illegal

Cons

• More expensive than other options
• Control of the company’s assets passes to the liquidator.
• Advertisement for claims published as part of the liquidation process (notice emphasises that the company is solvent) however risk of reputational damage