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Member Voluntary Liquidations (MVL)
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What is a Members Voluntary Liquidation or MVL? - Definition

 

 

The definition of a solvent company for members voluntary liquidation (MVL) purposes is found in Sections 89 and 90 of The Insolvency Act 1986. Essentially solvency is defined as being able to pay all the company debts within one year in full with interest at the official rate. The definition recognises that in a liquidation "cash" may not be sitting there but that the assets of the company have to be sold or realised before creditors can be paid - that is why the definition allows for twelve months to settle creditors claims in full.

 

When a company has ceased to trade and is solvent some mechanism has to be available to realise the assets, pay the creditors and return the surplus to the shareholders. That procedure is known as a Members Voluntary Liquidation or MVL.

 

The Members Voluntary Liquidation (MVL) procedure is particularly used when there are several interested shareholders and they require the intervention of a practitioner to ensure that the correct amount is distributed to each party and more importantly  the tax benefits of a capital distribution are obtained.