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When a company has come to the end of its life and there are enough assets to pay creditors, a Members Voluntary Liquidation can be a cost effective way of getting funds to shareholders.

Over our years of working within insolvency, we have been asked many questions by directors looking to close their company when they no longer need it. When designing this website, we thought that it would be best to summarise those queries that have been raised most frequently. If you have a question that you would like to ask, please contact us. We will be happy to reply to you directly and keep this page updated.


What is a Liquidation ?

It’s a process that turns the company’s assets into cash. That cash is then distributed to creditors and, if there is some left over, to shareholders.

In almost all circumstances it is the end of the road for the company.

Who turns the company’s assets into cash ?

A Liquidation must be conducted by an IP, who will be called the Liquidator.

What’s the difference between a Creditors’ Voluntary Liquidation (CVL) and a Members’ Voluntary Liquidation (MVL) ?

A CVL is an insolvent Liquidation. The company is not able to pay all its debts in full. An MVL is solvent and creditors will all be paid, together with interest.

Who appoints a Liquidator in a MVL ?

The shareholders will be required to pass resolutions to wind the company up and to appoint a Liquidator. The Liquidator will inform the creditors of their appointment.

What are the Liquidator’s duties ?

Overall, the Liquidator should act in the best interests of all creditors and shareholders. The Liquidator will review, agree or reject creditors’ claims prior to paying a dividend.

How long does a Liquidator have to pay creditors in full, as the company has a property to sell that may take some time ?

The directors will be required to sign a Declaration of Solvency before the company goes into an MVL. The Declaration will state that all creditors will be paid in full, plus interest, within a year of the Liquidation starting.

What if creditors aren’t paid within the year ?

If creditors cannot be paid in full, plus interest, then the MVL will become a CVL, even if there will be sufficient assets in the long term.

This is a serious matter and the directors may face personal consequences for making the Declaration of Solvency incorrectly.

How often must the Liquidator keep in touch with creditors ?

Most Liquidators are happy to deal with creditors’ queries throughout the Liquidation, but otherwise a Liquidator must report to creditors annually and when the Liquidation is finished.

Who pays the Liquidator ?

The Liquidator’s expenses and own costs come out of the company’s assets before unsecured creditors get paid. Those costs will be discussed up front and included on the Declaration of Solvency.

What happens to the company after Liquidation ?

It is “struck off” the register at Companies House. After a while the name is available to be re-used by anyone looking to set up a company.

Something we’ve not covered yet ? Send us a query via our contact page and we’ll answer you and add it to this section too.

Our guide to an MVL for directors and shareholders

For a detailed guide to the process and taxation in an MVL, click on our guide to an MVL. You'll be able to download it too.

What will it cost ?

Our policy for charging as a Liquidator in an MVL can be downloaded by clicking on our MVL fees. We believe that we are the only Liquidators who publish a transparent, competitive and fixed pricing policy and are proud to do so.

Why doesn't the company just purchase the shareholders' shares?

The crossover between tax and insolvency law is complex and careful consideration is required. We explain why an MVL is the correct procedure when closing a company.