Our team has many years of experience dealing with MVL’s. These are solvent liquidations where there are surplus funds after payment of creditors’ claims to return to the shareholders of the company.
MVL’s are used in a variety of situations, such as:
The retirement of the owners of the business
Cessation following a sale of the business assets
As part of section 110 Insolvency Act 1986 reorganisation
As part of a tax planning strategy
An MVL ensures that provisions are made for claims against the company prior to funds being returned to the shareholders. The company can then be struck off the company register.
We are often asked whether the Section 652A Companies Act 1985 striking off procedures should be used instead of a formal MVL. In some instances this procedure may be appropriate, but there is always the risk that an unforeseen liability arises and that an application is made to restore the company to the register so that this liability can be dealt with. Where the Section 652A striking off procedure is used, an application can be made for the company to be restored up to twenty years after the company has been struck off. This can result in funds being recovered from shareholders and directors may face criticism for their actions.
The appointment of a Liquidator in an MVL is advertised in both the local press and the London Gazette, with creditors being given a fixed period of time in which to submit claims. At the expiry of this time limit, the Liquidator will consider all claims and settle them as appropriate before passing the balance of funds out to the shareholders. The Liquidator in an MVL will also be in a better position to obtain confirmation from the Inspector of Taxes that there are no matters outstanding, as there are no formal clearance procedures under the company corporation tax pay and file regime.
We have dealt with the MVL's of a number of companies outside East Anglia, particularly companies based in London, as our costs are very competitive compared with those of city firms.
As a firm, we are also well placed to provide advice on tax planning issues or on the sale of a business prior to the MVL commencing. However, we are very happy to work with the company’s’ existing advisers. |