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Andy Wood - £30 million returned in solvent liquidations

£30 million returned in solvent liquidations – Andy Wood

Authored by Andy Wood

Andy Wood

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Approximate read time: 2 minutes

When a company has reached the end of its natural life, or perhaps the directors of the company wish to retire or shareholders recover their investment, a Members Voluntary Liquidation (MVL) may be the best route to choose.

Wilson Field operates a streamlined system, which enables us to minimise costs, giving a better return to shareholders.

An MVL is a means for closing the company and offers a greater degree of certainty than striking-off can provide. Perhaps more importantly in many circumstances, it offers legitimate tax advantages to shareholders.

Although such companies are solvent (which in this context means the company is able to pay all its debts within one year in full with interest at the statutory rate), the process has to be managed and controlled by a insolvency practitioner.

As part of my role as an insolvency practitioner I regularly oversee MVLs and having been in my role at Wilson Field for almost three years, I have examined my caseload.

Wilson Field operates a streamlined system, which enables us to minimise costs, giving a better return to shareholders. The value of distributions made to shareholders in solvent liquidations and S.110 Schemes of Arrangement, in my cases to date, amount to £14,958,550 distributed in cash and £15,279,782 worth of assets distributed ‘in specie’.

This shows an overall return to shareholders in solvent liquidations of £30,238,332 to date.

If the business has ceased trading, it is customary for the assets to be sold by the directors, thus making the liquidation process straightforward and this often enables investors to benefit from Entrepreneurs Relief, at the rate of 10% which is substantially less than the usual Capital Gains Tax rate which would otherwise apply.

Because this is not an insolvency procedure, it carries no adverse impact on directors’ credit scores, which is particularly important if they have other business interests.

The cost of a “cash” MVL can start at a set fee of £1,695 plus VAT plus disbursements but it is important to note that all liabilities of the company must have been settled prior to the liquidation – including all tax liabilities.

We can deliver these service for less than many of our competitors resulting in a better return to shareholders. We are not tax specialists and always advise that you discuss tax implications with your accountant or tax adviser prior to instructing us to undertake the process.

 

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