Considering closing your business? If you’re a solvent company – meaning you have enough assets to pay off your debts – a Members’ Voluntary Liquidation (MVL) might be the way to go. But hold on, there’s a crucial step in the MVL process that can cause some confusion: the Members’ Voluntary Liquidation Declaration of Solvency. Here at Blackstone Solicitors, we understand the legalese can be tricky, so let’s break down this declaration and what it means for your business closure.
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For a free initial discussion with a member of our New Enquiries Team, get in touch with us today. We are experienced in dealing with all the legal aspects of company law, and once instructed, we will review your situation and discuss the options open to you in a clear and approachable manner. Early expert legal assistance can help ensure you are on the best possible footing from the start and also avoid the stress of dealing with these issues on your own. Simply call us on 0345 901 0445 or click here to make a free enquiry and a member of the team will get back to you.
What is an MVL Again?
An MVL is a formal and controlled way to wind down a solvent company. It ensures all your financial obligations are met, and any remaining assets are distributed to shareholders. Think of it as a responsible and tidy way to say goodbye to your business.
The Declaration of Solvency: The Heart of an MVL
The Declaration of Solvency is a sworn statement signed by your company directors. It essentially says, “We, the directors, believe the company is solvent and can pay off all its debts (including interest) within 12 months of starting the liquidation process.”
This declaration is vital because it forms the foundation of an MVL. It assures everyone involved – creditors, shareholders, and the government – that the company is healthy enough to handle the closure process without leaving anyone hanging with unpaid debts.
Key Points About the Declaration of Solvency
Here are some important things to remember about this declaration:
- Directors’ Responsibility: The directors signing the declaration take on significant responsibility. If, during the MVL, it turns out the company isn’t actually solvent, the directors could face legal repercussions.
- Seeking Professional Advice: Given the weight of this declaration, it’s highly advisable to consult with an insolvency practitioner and potentially a solicitor before signing. They can assess your company’s financial health and advise on the accuracy of the declaration.
- Timely Preparation: The declaration needs to be prepared no earlier than five weeks before the general meeting where shareholders will vote on the MVL. This allows for any potential changes in your financial situation to be considered.
Who Can Sign the Declaration of Solvency?
In most cases, a majority of the company directors need to sign the Declaration of Solvency. If you’re a sole director, that means you’ll be the sole signatory. However, there can be exceptions depending on the specific circumstances of your company. Consulting with a solicitor can help clarify who needs to sign the declaration in your case.
What Happens After Signing the Declaration?
Once signed, the declaration is presented to the shareholders at a general meeting. If at least 75% of shareholders with voting rights approve the MVL, the liquidation process officially begins. An insolvency practitioner is appointed to handle the sale of assets, debt settlement, and distribution of remaining funds to shareholders..
Remember: The Declaration of Solvency is a crucial step in an MVL. Don’t hesitate to seek professional guidance to ensure its accuracy and protect yourself from potential legal issues. Blackstone Solicitors is here to answer your questions and guide you through every aspect of the MVL process.
How we can help
We have a proven track record of helping clients deal with the process involved with company liquidation. We will guide you diligently and ensure all checks are carried out swiftly and efficiently and we firmly believe that with the right solicitors by your side, the entire process will seem more manageable and far less daunting. You can read more about the range of corporate services we offer by clicking here: https://blackstonesolicitorsltd.co.uk/corporate-legal-services/
How to Contact Our Corporate Solicitors
It is important for you to be well informed about the issues and possible implications of liquidating a company. However, expert legal support is crucial in terms of ensuring a positive outcome to your case.
To speak to our Corporate solicitors today, simply call us on 0345 901 0445, or click here to make a free enquiry. We are well known across the country and can assist wherever you are based. We also have offices based in Cheshire and London.
Disclaimer: This article provides general information only and does not constitute legal advice on any individual circumstances.
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