Jurisdiction(s):
United Kingdom

Key definition

Options definition

What does Options mean? In legal practice, an option is a contractual right, not an obligation, to buy (a call) or sell (a put) an identified underlying (for example shares, commodities or currency) at an agreed strike price either on the expiry date (European-style) or at any time up to expiry (American-style). The holder pays an option premium for this right; key terms include the underlying and quantity, strike, expiry and the settlement method (physical delivery or cash settlement). Options are used to hedge risk, obtain price protection or leverage exposure, and are fundamental in derivatives, corporate finance and remuneration structures. The term is...

Failed MVLs: Conversion to CVL, Creditor Procedures, Statement of Affairs and Novalpina Solvency Test—Practical Considerations (England and Wales)

Published by a LexisNexis Restructuring & Insolvency expert

Practice notes

What happens if a members’ voluntary liquidation fails and exit options

An MVL will be regarded as having failed where it must be switched from a solvent winding up to an insolvent one. Should the liquidator, at any point in the MVL, conclude that the company will not satisfy its liabilities in full, with interest at the official rate, within the timeframe set out in the declaration of solvency, they are required to prepare a statement of the company’s affairs and, within seven days of that conclusion, circulate it to the company’s creditors together with a notice explaining the position. The relevant test is whether all debts (plus interest) can be discharged within the stated period, which cannot exceed 12 months from the date the liquidation began. It is not a test of balance sheet solvency. Once it becomes clear that payment in full within that period will not be achieved, the liquidator is obliged to move the MVL into a creditors’ voluntary liquidation (CVL) without delay. For additional reading, see News Analyses: Disputed debt and conversion of members’ voluntary liquidation to creditors’. This duty to convert arises the moment that inability is apparent to the liquidator under the MVL...

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Web page updated on 21/05/2026

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