The process of a Members’ Voluntary Liquidation is handled fully by a licensed insolvency practitioner who will identify company assets, repay any creditors and distribute the remaining funds to shareholders.
Depending on the size of the company and the complexity of the case, a Members’ Voluntary Liquidation can take up to a year to complete.
How long does it take to begin the Members’ Voluntary Liquidation process?
To begin the process, directors must first send a statutory declaration to Companies House stating they have reviewed their finances and have determined that they will be able to pay all existing debts within a period of no more than 12 months.
Within 5 weeks of issuing this declaration, the directors of the company must pass a resolution to officially begin the winding up process.
Within 14 days of the resolution being passed, an advert will be placed in the Gazette and a creditor’s meeting will be held. Creditors must be notified at least one week before the meeting.
Within 15 days the resolution must be lodged with the registrar.
What is the timescale for a Members’ Voluntary Liquidation?
The full timescale for a Members’ Voluntary Liquidation, from start to finish, is typically between six months to a year, but this can vary depending on the complexity of the business.
The timeline for an MVL is as follows:
- Directors resolution- The MVL process will begin with a resolution passed by the company’s directors.
- Declaration of solvency- Directors must then sign the declaration of solvency.
- Shareholders meeting- After the Declaration of solvency, a shareholders meeting must be called to approve the MVL.
- Appointment of liquidator- The shareholders must then appoint a liquidator to oversee the liquidation process.
- Notification to creditors- The liquidator must notify all known creditors that the MVL process has begun.
- Payment of creditors- The liquidator must now pay all of the company’s creditors in full, including any interest that may be due.
- Distribution of surplus assets- Once all the creditors have been paid, the liquidator must distribute any surplus assets to shareholders.
- Final meeting- After all assets have been distributed, the liquidator will hold a final meeting with the shareholders to discuss the liquidation process.
- Dissolution- Finally, the liquidator must file all necessary documents with Companies House to formally dissolve the company. The company is then removed from the register and will cease to exist.
When are funds distributed to shareholders in a Members’ Voluntary Liquidation?
Usually, shareholders of the company will receive around 75% of the funds extracted from the company within about 3 months of entering into the Members’ Voluntary Liquidation.
Members should receive the remaining balance of the liquidation account as soon as HMRC clears the case, which typically takes around 2 months.
How long does it take to finalise a Members’ Voluntary Liquidation?
It can take around 3-6 months to finalise a Members’ Voluntary Liquidation and the case to cease to exist on Companies House.
This can take longer if HMRC takes a while to clear the case, since it can prevent members from receiving the remaining balance after shareholders have been paid.
When does a Member’s Voluntary Liquidation end?
A Members’ Voluntary Liquidation ends once the appointed liquidator files all necessary documents with Companies House to close the business. This is known as dissolution and once the process is complete, the business is no longer legally or publicly recognised and it is officially a dissolved company.
However, unlike a traditional dissolution process, an MVL requires a company to pay off any debts within 12 months. This differs slightly from a regular dissolution as a liquidator must be involved.