Suitable for: Directors who believe their company is solvent and no longer wishes to trade.
A Members’ Voluntary Liquidation is often referred to as a solvent winding-up and requires the creditors to be paid in full. An MVL results in the company being liquidated, realising the remaining assets and payments being made to creditors. Any remaining funds will be distributed to the shareholders.
For an Members’ Voluntary Liquidation to be completed, the directors must swear a declaration of solvency following an inquiry into the company’s affairs. The creditors must be paid in full with interest at the official rate within 12 months.
Typically, a Members’ Voluntary Liquidation is the preferred method where a company has significant distributable reserves. Directors often favour this method as there is a robust due diligence process and once the company no longer exists; there is no recourse to the shareholders.