Three Stone
3 Experts
10 Contributions by Three Stone Experts
PRACTICE NOTES
MVL
A members’ voluntary liquidation (MVL) is widely used and highly adaptable, with the timing and approach initially shaped by the shareholders and, once a liquidator is appointed, thereafter directed by that office-holder. It can also operate as a practical instrument within a broader plan that brings a range of companies in the group into scope. The liquidator’s steps in settling the company’s affairs are intended to offer greater certainty for all stakeholders and deliver added safeguards for directors and shareholders alike. Although an MVL will generally be more expensive than dissolution or striking off, the advantages can outweigh and justify those additional costs...
Restructuring & Insolvency
PRACTICE NOTES
Bankruptcy estate
Under section 306(1) of the Insolvency Act 1986 (IA 1986), the bankrupt’s estate passes to the trustee in bankruptcy (trustee) immediately upon their appointment, whether that is the official receiver (OR) or an insolvency practitioner (IP). Property transfers automatically, without any conveyance of title, assignment or transfer whatsoever.
The bankrupt’s estate includes:
all property belonging to, or vesting in, the bankrupt at the commencement of the bankruptcy (ie when the bankruptcy order is made), and
any property which, by virtue of IA 1986, Pt IX, is comprised in, or treated as falling within, the estate
‘Property’ is defined in very broad terms. For further reference, see: What vests and does not vest in the trustee in bankruptcy—checklist.
In addition to property that is plainly part of the estate on bankruptcy, there are two principal ways the trustee can augment the property within the
Restructuring & Insolvency
PRACTICE NOTES
This Practice Note sets out the process for placing a Limited Liability Partnership (LLP) into compulsory winding up, outlines the liquidator’s authority, and details the members’ duties. It does not cover Limited Partnerships; for those, refer to Practice Note: Limited partnerships and insolvency—key principles.
Applicable legislation
LLPs were created by the Limited Liability Partnerships Act 2000 (LLPA 2000), which should be considered alongside the Limited Liability Partnership Regulations 2001 (LLPR 2001), SI 2001/1090. Through LLPR 2001, SI 2001/1090, the Insolvency Act 1986 (IA 1986) and the Insolvency (England and Wales) Rules 2016 (IR 2016), SI 2016/1024, are applied to LLPs. The IA 1986 has effect only for LLPs registered in Great Britain...
Restructuring & Insolvency
PRACTICE NOTES
A voluntary liquidator may only be removed by an order of the court or as follows:
for a members’ voluntary winding up (MVL), by a general meeting of the company convened expressly for that purpose, or
for a creditors’ voluntary winding up (CVL), by a decision of the company’s creditors reached via a qualifying decision procedure initiated specifically for that purpose
This Practice Note addresses the latter...
Procedure for removal of a voluntary liquidator
Proposal of decision procedure
A decision procedure must be initiated under section 171(2)(b) of the Insolvency Act 1986 (IA 1986) to remove the liquidator if creditors holding 25% in value—disregarding those connected with the company—request it. However, where the liquidator was appointed by the court under IA 1986, s 108, a qualifying decision procedure is to be initiated only if:
the liquidator considers it
Restructuring & Insolvency
PRACTICE NOTES
Before any appointment is made, the central matter to agree with the nominated liquidator is the company’s real position on solvency.
For further detail, see Checklist: Directors' due diligence questionnaire and guidance before swearing a statutory declaration of solvency for a members' voluntary liquidation.
Documents and information to be provided to the liquidator by the company
To confirm the company’s true financial standing, provide the nominated liquidator with the following:
a current schedule of the company’s assets and liabilities. Where the company has ceased trading, compile the schedule up to the date trading ceased...
Restructuring & Insolvency
PRACTICE NOTES
When a company’s matters have been fully and finally concluded, the liquidator is required to prepare a statement of the liquidation, detailing the manner in which it was carried out and the disposal of the company’s assets. A copy of this statement must be sent to company members and the Registrar of Companies within 14 days, counting from the date the statement is prepared and completed. Before doing so, the liquidator must serve notice on the company’s members, enclosing the proposed final account, and provide at least eight weeks’ notice of the specified date on which the final account is intended to be delivered to them by the liquidator on that date...
Restructuring & Insolvency
PRACTICE NOTES
Members’ voluntary liquidation
Voluntary liquidation, also known as winding-up, is the process by which a company, following a resolution of its members, chooses to bring its activities to an end and move towards ultimate dissolution. There are two forms:
members’ voluntary liquidation (MVL), when the company is solvent and the members retain majority control; and
creditors’ voluntary liquidation (CVL), when the company is insolvent and creditors take majority control.
The distinction between them rests on whether the directors consider the company able to pay all debts in full, with interest at the official rate, within a period not exceeding 12 months from the commencement of the winding-up. If they do, this is set out in a declaration of solvency and the company can proceed by way of MVL. If they do not, it must instead go into CVL. For further reading, see Practice Note: What is a
Restructuring & Insolvency
PRACTICE NOTES
A members’ voluntary liquidation (MVL) occurs when a company is solvent and an orderly wind-up of the company is required.
For more detail, refer to the following Practice Notes:
What is a members’ voluntary liquidation and when is it typically used?
MVL—the information and documents to be provided to the liquidator by the company
The procedure is set in motion at a board meeting once the directors conclude the company can settle all its debts in full, together with interest at the official rate, within no more than 12 months from the start of the winding up. A company can be wound up voluntarily under members’ control only where a majority of the directors have made a statutory declaration of solvency and provided a statement of the company’s assets and liabilities (along with the other matters required by Insolvency (England and Wales) Rules 2016, SI
Restructuring & Insolvency
PRACTICE NOTES
This Practice Note outlines the process by which a Limited Liability Partnership (LLP) may enter into a voluntary arrangement (VA). It does not extend to Limited Partnerships; for those, refer to Practice Note: Limited partnerships and insolvency—key principles.
Applicable legislation
The Limited Liability Partnerships Act 2000 (LLPA 2000) established LLPs and should be read alongside the Limited Liability Partnerships Regulations 2001 (LLPR 2001), SI 2001/1090. Through the LLPR 2001, SI 2001/1090, the Insolvency Act 1986 (IA 1986) and the Insolvency (England and Wales) Rules 2016 (IR 2016), SI 2016/1024, are applied to LLPs...
Restructuring & Insolvency
CHECKLISTS
Where it is proposed to wind up a solvent company voluntarily
When a solvent company is to be wound up voluntarily, the directors may, at a board meeting, make a statutory declaration of solvency confirming that, after a full enquiry into the company’s affairs, they hold the view the company can pay all its debts in full, together with interest at the official rate, within no more than 12 months from the commencement of the winding-up.
See Practice Notes:
What is a members’ voluntary liquidation and when is it typically used?
MVL—the information and documents to be provided to the liquidator by the company
It should be noted that if the directors make such a statutory declaration, the company proceeds by way of a members’ voluntary liquidation (MVL). Where no declaration is made, the company instead enters a creditors’ voluntary
Restructuring & Insolvency
If you expected to see yourself on this page, click here.
