What is the Procedure For a Members Voluntary Liquidation?
- December 9, 2022
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The process of winding up a solvent business is known as Members Voluntary Liquidation. In this process, the shareholders of a company choose a liquidator for carrying out the liquidation procedure. A Members Voluntary Liquidation, commonly known as MVL, is different from a solvency procedure, and that is why a statutory declaration is required for the liquidation. This declaration has to Members Voluntary Liquidation be approved by the board of directors.
An MVL is carried out to fulfil certain objectives. One of the most prominent ones is realising the assets of the company. Another objective is the distribution of the proceeds to the shareholders. This is done in accordance with the rights of the shareholders, according to their shares in the company. Before paying the shareholders, creditor claims are satisfied.
Company In Liquidation
If you want to find out about what to do for placing your company in liquidation, you can consult the Companies House guidance booklet. Other than that, in order to go along with the procedure of MVL, it is advisable to take professional help. You can seek the advice of a solicitor or an insolvency practitioner.
The process of an MVL is different from a compulsory liquidation. In the latter, you do not have any choice but to liquidate and pay off the debts of your company. However, MVL is on a voluntary basis, on part of the shareholders of the company. The procedure used for carrying out the MVL is straightforward.
Entire Process in a Matter
With the help of an expert, you can be done with the entire process in a matter of weeks and satisfy the claims of your creditors as well as the rights of the shareholders. The directors of a company can deal with the liquidation process themselves. However, before doing that, it is required to obtain a license for being authorized to carry out the liquidation.
After the directors have obtained the license from court, the next step is the valuation of the assets of the company. The assets, which are listed on their historic or book value on the balance sheet of a company, are valued on their fair value for them to be sold.
After the assets have been valued, the liquidator draws up a document called a statement of affairs. This includes the analysis of the financial position and performance of a company. This is done in order to show that the company is in a position that its liquidation can ensure chances of the creditors getting their money back.
After the creditors are given the analysis of the company, a meeting is held and the creditors share any concerns they may have. The meeting does not always take Members Voluntary Liquidation place, but only when there is some serious concern on the part of the creditors. After this, there is the final step, in which the shareholders, who are the owners of the company, hold a meeting in which they give up the ownership of their shares in the company. Only after this, it is possible to liquidate the company. The entire process takes a few weeks before the liquidation is completed.