Mercer & Hole recognises that liquidation continues to be the route most frequently used by directors and shareholders who wish to bring an efficient, relatively quick and uncomplicated end to a company‘s existence. Mercer & Hole can provide professional advice and assistance based upon years of experience of dealing with liquidations.
There are different types of liquidation depending upon whether the company is solvent or insolvent, i.e. unable to pay all of its debts in full. Mercer & Hole can advise you on the appropriate type of liquidation for the company.
Creditors’ Voluntary Liquidation (CVL) – Insolvent Liquidation
If the company’s liabilities exceed its assets or it cannot pay its debts or continue to trade then a CVL is a quick way to close a company, protect assets and deal with creditor pressure.
Mercer & Hole will prepare all the necessary paperwork the directors require to initiate the CVL process and convene meetings of the company’s shareholders and creditors. The shareholders will be asked to pass a resolution to place the company into liquidation and appoint a Licensed Insolvency Practitioner from Mercer & Hole as liquidator. The shareholders’ meeting is followed by a meeting of the creditors at which various resolutions are passed including confirmation of the shareholders’ choice of liquidator. Once appointed as liquidator, the Licensed Insolvency Practitioner from Mercer & Hole will deal with the realisation of the assets and agree creditor claims. After payment of the liquidators’ costs from the assets available, the liquidator shares out the assets equally amongst each class of creditor. Three months following the closure of the liquidation the company is automatically dissolved.
Members’ Voluntary Liquidation (MVL) – Solvent Liquidation
If a company has no further purpose, for example due to retirement of the owners, and has sufficient assets to pay all of its liabilities with interest within 12 months, then a MVL is a tax efficient means of closing the company and distributing its assets to its shareholders. Mercer & Hole can provide tailored advice for each situation together with appropriate tax advice.
Mercer & Hole will prepare all the necessary paperwork the directors require to convene a meeting of shareholders and prepare a sworn Declaration of Solvency (statement of assets and liabilities). The company can be placed into a MVL with the approval of not less than 75% of the shareholders voting at the meeting. A Licensed Insolvency Practitioner from Mercer & Hole is appointed as liquidator at a shareholder meeting. The liquidator then realises the assets, settles any liabilities, obtains all appropriate tax clearances and distributes the remaining assets to the shareholders.
A MVL may also allow a business to restructure under Section 110 Insolvency Act 1986. Mercer & Hole can provide specialist advice on how this can be particularly useful if shareholders wish to separate different parts of the company’s business into different legal entities.
When considering liquidation professional advice should be sought from Mercer & Hole on the company’s financial position and any tax planning issues. Our Partners and Directors are Licensed Insolvency Practitioners who can provide you with advice tailored to your requirements; assist with placing the company into liquidation and act as liquidators.