What are Members' Voluntary Liquidation Steps?

Member voluntary liquidation is helpful for the business who do not wish to continue their operations even if they are solvent. This kind of situation arises when the director thinks that it is not variable for them to carry on the business even though it is not suffering from any kind of losses yet. This process is adopted to wind up the business by realising its assets and paying off the debts of creditors as per their seniority. This whole process requires the supervision of insolvency practitioners and this kind of liquidation can take place only after the approval of the shareholders. Below are members’ voluntary liquidation steps that need to be performed to complete this process. 

Initial meeting - A initial meeting is called up as one of the primary steps of MVL where consensus is reached for the liquidation of the company using this process. Directors can discuss the viability of the business and reasons to close the operation. There can be other ways also to close the business and all these ways and factors are considered in detail before deciding to adopt the MVL. In this meeting, two important resolutions are passed by the directors. One is to call the meeting of shareholders and the other is a resolution to declare the solvency of the company. 

Declaration of Solvency - Before starting the process of liquidation the directors must declare the solvency of the company. They should undertake that the company has full capacity to pay off its debts including the related interests within the twelve months of signing the document for this declaration. The information comprising this document should be true and if there is any default it may complicate the whole process when the liquidator takes charge of the process. 

Shareholders Meeting - It is one of the most essential members voluntary liquidation steps as shareholders are one of the key parties to affect from this process. Shareholders should get complete details for the resolutions passed in earlier meetings and details for the appointment of the liquidator. They should also get clarity about the process of assessment and distribution of assets during the whole process. 

Commencement of liquidation - After completing the above members voluntary liquidation steps the commencement of the liquidation takes place. The liquidator appointed for the process will carry on the necessary steps to complete the process of selling the company assets and using the money acquired by it to pay off the debts of the creditors. It is his responsibility to remove the company from the list of companies' houses and resolve any kind of legal issues faced by the company w.r.t to its contracts and creditors. He is also responsible to act on the company’s behalf while dealing with authorities and providing updates for the execution of the whole process to directors and other relevant parties. 

Distribution of the assets - Once the above step is completed it is the time for distribution of the assets with a signed indemnity is provided to the liquidator. This enables him to distribute all the assets remaining after paying off the debts and taxes of the company. He will also keep a sufficient reserve to cover his fee and payment for any supplement needs during the completion of this process. 

If you are looking for the best insolvency practitioners to take up the MVL process of your company then you can choose to contact the team of Simple Liquidation which is helping hundreds of businesses to make the process of Member Voluntary Liquidation smooth and flawless with its years of experience in dealing with such situations.