This
provides a greater degree of certainty than a striking-off
and can be a useful tool in re-structuring. The Insolvency
Practitioner will manage the whole procedure and ongoing
liability only lasts until dissolution, compared to twenty
years in a striking-off.
This is the liquidation of a company
which is solvent, i.e. asset rich and can take place
under the following circumstances:
a breakdown in the relationship between directors
and/or members; changes in the market which result
in the company no longer being a viable business;
or the members wish to " remove their investment
from the company" and retire.
The directors would be required to produce
a schedule of assets and liabilities known as a declaration
of solvency. This document
would state that all of the company’s debts
would be paid in full within twelve months of the date
of the liquidation.
In order to pass the resolutions to wind the company up and appoint a Liquidator the directors would pass resolutions at a Board meeting and the members would attend an Extraordinary General Meeting (EGM).
At this point the company would cease trading if it had not already done so.
All assets of the company including book debts would be realised and proceeds of these would fund the cost of the Liquidation. Any excess funds would be available as a dividend to creditors, payable in the order
of priority.
A dividend would be paid to members after the unsecured creditors had been paid in full plus interest.
An MVL could enable members to extract their investment from a company in a co-ordinated manner in order to benefit from effective tax planning.
A final meeting would be summoned by the Liquidator when their duties had been completed and the company would then be dissolved three months after the final meeting.
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