Licensed to act in the UK by the institute of Chartered Accountants in England & Wales
Laurence S Burt
Liquidation (also known as 'winding up')
Members Voluntary Liquidation ["MVL"]
This option is only available to solvent companies.
An MVL will last for no longer than 12 months and the directors must declare that there are sufficient assets within the company to repay all debts.
Creditors Voluntary Liquidation ["CVL"]
A CVL is a procedure instigated by the directors of an insolvent company.
The shareholders of the company will pass a resolution to place the company into liquidation and also nominate a liquidator. A meeting of all the company's creditors will then be called where they will receive information on the company's financial position and appoint the liquidator.
At this meeting creditors will be invited to bring to the liquidators attention any matters that they wish to be investigated.
A compulsory liquidation is usually instigated by one or more of the company's creditors.
Any creditor with a debt of over £750 can petition the court for the compulsory liquidation of a company. If the court decide that the company is unable to pay its debts the court will make a winding up order. The official receiver will become liquidator.
© Ganley Burt 2005