Members’ Liquidation

Members’ Liquidation, also known as Members’ Voluntary Liquidation happens when the directors and shareholders decide to liquidate a business with sufficient assets to clear all debts within a 12 month period. There are some important guidelines to follow before deciding that Members’ Liquidation is the right route for your business.

The main thing to consider is that a false declaration of solvency can result in a fine or even a prison sentence. At the very least a false declaration of solvency can lead to the MVL being converted into a Creditors Voluntary Liquidation with the associated investigation into the conduct of the directors.

The advantages of a Members Liquidation is that it is an orderly solvent wind down of the business paying all debts in full with a resultant return to shareholders, if funds allow.

A Members’ Liquidation can be a relatively straightforward process and can cost less than other forms of liquidation.

A liquidator is appointed to work with the directors/shareholders in order to realise company assets, agree creditors’ claims and make a payment in full in accordance with priority.

A return can then be made to shareholders and the company will cease to trade.

If you decide that a Members Liquidation is the right route for your business, it is sensible to seek the help of professionals to make sure the process is carried out correctly. The consequences of making a false declaration can be severe.