Liquidations are terminal procedures which will result in a Company being placed under the control of a licensed insolvency practitioner acting as a liquidator. The liquidator role is to wind down the business and maximise returns to creditors. Liquidation can be both used by solvent and insolvent business.
At Parker Getty we can assist our clients by acting as liquidator using the following procedures:
Creditors Voluntary Liquidation (CVL)
Upon receiving written instructions meetings of members and creditors will be convened at which resolutions will be sought by a company’s members and creditors to place a company into liquidation and to appoint a liquidator.
Key Benefits
- A company can be placed into liquidation within a short time frame.
- Upon the Company being placed into liquidation the directors’ management function will cease and all creditor communications will be addressed to the liquidator
- Through the process directors can comply with their fiduciary duties in accordance with the Companies Act 2006 and Insolvency Act 1986
Member Voluntary Liquidation (MVL)
This is a formal process to close and dissolve a solvent company. To be applicable for this process a company has to have sufficient assets to discharge in full all its creditors within one year of being placed into liquidation. After creditors have been discharged any remaining assets or funds will be distributed to the company’s shareholders.
A declaration of solvency will be prepared and a meeting of a company’s members convened at which resolutions will be sought to place the Company into liquidation and a liquidator be appointed.
Key Benefits
- A company can be placed into liquidation within a short time frame.
- In line with recent tax legalisation only distributions to shareholder made through an MVL in excess of £25,000 will receive capital tax treatment as opposed to falling under income tax treatment.
- Further tax benefits are available through entrepreneurs relief which may reduce the rate of tax payable.
Compulsory Liquidation
This is a Court driven process whereby a creditor, a company, its directors and or shareholder(s) can petition the Court to wind up the company. If a winding up order is made against a company the official receiver will act in the capacity of a liquidator. Within 3 months of the winding up petition being made a creditors meeting may be convened at which creditors can appoint their own liquidator should the required majority be reached.
Upon a winding up petition being presented the bank will often freeze all company accounts. Parker Getty can advise clients on the options available to them if a petition has been presented against them, or alternatively if a petition is being sought against a creditor.
