LONDON, June 18 -- The government of the United Kingdom issued the following news:
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A Members' Voluntary Liquidation is a formal process used by solvent companies that have reached the end of their useful life.
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The research wascommissioned to improve understanding of the MVL landscape.
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The research looked at 2,309 MVL cases between2016 and 2024.
A new research study commissioned by the Insolvency Service has found that Members' Voluntary Liquidations (MVLs)areoperatingeffectively,paying creditors in full inalmost allcases.
A MVLis a formal process used by solvent companies that have reached the end of their lifeandtoensurethey can close in an orderly way,while paying all creditors in full.
The study, looking at more than two thousand cases,is the firstlarge-scaleanalysis of MVL outcomes in England and Wales.
It was commissioned to improve understanding of the MVL landscape and to assess the potential impact ofa recent High Court rulingwhichinterpreted the law to requirethatall creditors and interestbe paid within 12 months of an MVL'scommencement.The case is currently subject to appeal.
Theresearch found that Members' Voluntary Liquidations are achieving their coreobjectives.
Key findings
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Creditors were paid in full within 12 months in95per centofthe closedcases examined.
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Scenarioswherecreditors remainedunpaid beyond12monthswerefound to be rare.
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Onlysevenout of 2,309 cases converted from MVL to Creditors' Voluntary Liquidation (CVL), and oneoftheseresulted inadirector disqualification.
Members' Voluntary Liquidations: A Statistical Review of MVL Practice and Outcomes - GOV.UK
The Insolvency Service'sCo-Director for Strategy, Policy and Analysis, Claire Hardgrave, said:
This research provides the clearest picture to date of how Members' Voluntary Liquidationsoperatein practice.
The findings show that MVLsplayan important rolein the economy, with creditors being paid in full inalmost allcases andthesecompanies able to close in an efficient way.
We will continue to monitor the landscape closely and ensure the insolvency frameworkcontinues tosupporteconomicconfidence.
More about Members' Voluntary Liquidations
A Members' Voluntary Liquidation(MVL)is a formal process used by solvent companies that have reached the end of their useful life.
Directors must confirm that the company can meet all its liabilities within the statutorytimeframebefore appointing a licensed insolvency practitioner to realise assets, settle liabilities, and distribute any surplus to shareholders.
There is no legal requirement to conclude a MVL within 12 months. The legal requirement considered by the court case is that creditors must be paid within this period.Payments to members (i.e. shareholders) have no statutory time limit
Where a MVL isfoundto be insolvent, the liquidator must take steps to convert it into a creditors' voluntary liquidation (CVL), the insolvent version of voluntary liquidation. Where this happens, the CVL liquidator must report on the directors' conduct to the Insolvency Service. Where sufficient misconduct is shown - and it is in the public interest to do so - directors may face disqualification action in these cases.
All MVL liquidators must be licensed insolvency practitioners, who are regulated professionals. Insolvency practitioners are supervised for anti-money laundering purposes and must abide by all requirements of anti-money laundering legislation, includingsubmittingsuspicious activity reports where suspicious behaviours areidentified.
Disclaimer: Curated by HT Syndication.
