What are the benefits of a Members’ Voluntary Liquidation (MVL)?
All distributions to shareholders in an MVL are treated as capital rather than income -shareholders can benefit from advantageous tax rates and reliefs;
Pre-MVL tax and accounts can be prepared by your accountant to enable shareholders to gain maximum value;
The new rules relating to the reduction of share capital impose similar requirements on the Company and its directors as an MVL and there will be associated cost implications;
Non-cash assets can be distributed in an MVL in-specie;
Early distributions of capital can be made prior to the liquidation being completed;
In simple cases the costs of MVL are minimal;
The Liquidator is responsible for identifying liabilities, ensuring these are paid and obtaining final tax clearance.
What is the difference between a creditors’ voluntary and a compulsory liquidation?
A creditors’ voluntary liquidation, is brought about by resolution of the Company through its directors and shareholders and is conducted by a qualified insolvency practitioner.
A compulsory liquidation is brought about by an order of the court usually on a creditors’ petition and can be conducted by the Official Receiver or a qualified insolvency practitioner.
What is an IVA?
An Individual Voluntary Arrangement (IVA) is an alternative to Bankruptcy. It is a contract between you and your creditors. The terms of your proposal to creditors may be flexible, but creditors will reasonably expect their prospects of recovering money to be at least as good as in a bankruptcy. Further, they will expect the proposal to contain sanctions (such as a right to bankrupt you) if you do not fulfil your part of the bargain.
White Maund will help you with your proposal to creditors. Your proposal will be voted on by the creditors at a creditors meeting. If the proposal is accepted by over 75% (by value) of the creditors who vote then the proposal becomes legally binding on all creditors notified of the proposal. Once accepted, creditors have no alternative but to stop any further interest and charges accruing on the outstanding debts.
Upon the successful completion of the IVA you will be considered debt free even though you may not have actually paid off all of your debts in full. You will then be free to make a fresh financial start. Call or email us to find out more.
What is personal debt?
Debt is something you owe to another person. In financial terms, debt is when you owe money to a creditor or lender, in return for finance or goods you have obtained from them. Debt isn’t a problem if you can repay it but once in debt, many people experience financial problems or personal circumstances that cause them to fall deeper into debt.
How do I make myself bankrupt?
First, you will need to complete the necessary forms, which you can print off from the Insolvency Service website at the following link: http://www.bis.gov.uk/insolvency/About-us/forms/england-and-wales
The petition, form 6.27 – this form is your request to the court for you to be made bankrupt and includes the reasons for your request.
The statement of affairs, form 6.28 – this form shows all your assets (anything that belongs to you that may be used to pay your debts) and all your debts. It includes the names and addresses of the creditors and the amount you owe each one.
The form contains a Statement of Truth which you will need to complete.
Will I be disqualified as a director?
You will not become disqualified just because your company is insolvent. Disqualification proceedings are only brought if warranted by the director’s conduct. You will only be disqualified if you do not meet your legal responsibilities and have demonstrated unfit conduct such as:
- allowing a company to continue trading when it can’t pay its debts
- not keeping proper company accounting records
- not sending accounts and returns to Companies House
- not paying tax owed by the company
- using company money or assets for personal benefit
Less than 10% of directors of insolvent companies are disqualified. Should you be disqualified the minimum disqualification period is 2 years and the maximum is 15 years, a disqualification prevents an individual from being a director of a company or being concerned in or taking part in the promotion, formation or management of a company.
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