Members’ Voluntary Liquidation (MVL)

The process for members’ voluntary liquidation:

  1. The company directors make a declaration of solvency or complete form 4.25 for companies in Scotland.
  2. Within 5 weeks the company holds a general shareholders meeting.
  3. The shareholders meeting should pass a resolution for voluntary winding up and appoint an authorised insolvency practitioner as a liquidator to wind up the company.
  4. Within 14 days of the resolution it must be published in The Gazette.
  5. Within 15 days of the resolution the company sends the declaration to Companies House or form 4.25 to the Accountant in Bankruptcy for Scottish companies.

 

What is Members’ Voluntarily Liquidation? Members’ Voluntarily Liquidation Explained

Members’ voluntarily liquidation is the process that is used when the company is solvent and can pay all its creditors in full and the owners of the business do not want to run the business any more. An insolvency practitioner is appointed as liquidator to oversee the winding up. The directors are required to swear a declaration that the company is solvent and confirm that the company can pay all its liabilities including any interest due within 12 months from the commencement of liquidation.

Where a company has three or more directors, then a majority of the directors are required to sign. Signing a declaration of solvency when the company is not solvent is a criminal offense, regardless of whether or not the directors knew the company was insolvent. When assessing the company’s liabilities the directors must consider not only all trade creditors, but also any loans and interest thereon, all tax and VAT, and the potential for any employee claims for redundancy and statutory notice pay.

The declaration of solvency is signed shortly before the members’ voluntarily liquidation commences and a statement of assets and liabilities is prepared which confirms the company’s financial status. The declaration of solvency states the name and address of the company and the names and addresses of all the company’s directors. The declaration of solvency also confirms how long it will take the company to pay off all its liabilities, and it is a requirement of members’ voluntarily liquidations that this period cannot be more than one year from when the liquidation starts. If the company has one or two directors, they must both sign the declaration of solvency, if there are more than two directors, then a majority are required to sign.

 

Members’ Voluntarily Liquidation Notices

The following is a list of Notices that can be published during the process of members’ voluntary liquidation and what they mean:

2434 Annual Liquidation Meetings (Notice 2434 under Members’ Voluntary Winding Up). If the liquidation takes more than a year, there can be meetings of company and creditors at each year's end.

2432 Appointment of Liquidators (Notice 2432 under Members’ Voluntary Winding Up). Placed by the liquidator this notice provides details of the date of appointment, name and address, and contact details of the liquidators.

2435 Final Meetings (Notice 2435 under Members’ Voluntary Winding Up). This notice is placed by the liquidator for the purpose of calling a final meeting prior to dissolution in a members' voluntary liquidation. The creditors will receive the liquidators report and a decision will be made as to whether the liquidator should be released.

2433 Notices to Creditors (Notice 2433 under Members’ Voluntary Winding Up). Notice placed by the liquidator giving notice to creditors of the company to send details of their debts to the liquidator by a given deadline.

2431 Resolutions for Winding-up (Notice 2431 under Members’ Voluntary Winding Up). This notice is placed by the company when it has been decided to enter into members’ voluntary winding-up process. Once a resolution has been passed for members’ voluntary winding-up by the company’s shareholders this notice must be published within 14 days.

 

See also corporate insolvency:

Administration

Creditors' Voluntary Liquidation (CVL)

Winding Up Petitions and Winding Up Orders

Members’ Voluntary Liquidation (MVL)

Receivership

Company Voluntary Arrangement (CVA)

Liquidation

Company Insolvency Procedures

Warning Signs of Insolvency

 

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