How Long Does an MVL Take?

A members’ voluntary liquidation (MVL) is a process of closing a solvent company in an orderly manner, paying off debts, and selling and distributing assets to shareholders. This occurs when directors wish to retire or move on to other projects, or it can simply be that the original purpose of the company has been fulfilled.

Does a Members Voluntary Liquidation Take a Long Time?

You may be wondering how long does an MVL take? There’s no precise answer as each business is different. It can take up to a year but will be quicker in many cases. For a clearer idea, it helps to understand the stages of the MVL process.

The following timeframe is approximate.

Preparation: 1 to 2 weeks

A full review of the company’s financial position is undertaken. All records are gathered, and the value of assets and liabilities is determined. Only a solvent business can use an MVL – a company must ensure all debts can be paid within 12 months. Shareholders only receive the profits after liabilities have been settled.

At this stage, a licensed insolvency practitioner (IP) should be engaged. The IP determines if an MVL is a viable approach for your company. If so, the IP acts as the liquidator and oversees the process.

Declaration of Solvency: 1 week

The financial situation is then confirmed in the solvency declaration, which takes the IP up to 7 days to prepare.

This declares all assets and liabilities and confirms all debts can be repaid within the required period. It’s signed by the directors and must also be sworn before a notary or solicitor.

NOTE: it is a criminal offence to sign the document if the company isn’t solvent.

Shareholders Meeting: 1 to 2 weeks

The members will want to know how long does a members’ voluntary liquidation take.

The directors meet with the shareholders (usually remotely) to present the solvency declaration. This provides a clearer view of the timeframe and presents all relevant details for the members.

Members then vote to wind up the company. If 75% of shareholders agree, the company goes into liquidation. The shareholders have 14 days to convene the meeting if it’s to take place in person.

How Quickly Can We Do a Members Voluntary Liquidation (MVL)?

Liquidation Process: up to 6 months

So, how long does an MVL take? The formal process starts here.

Step 1: The liquidator ensures the resolution is advertised in the London Gazette. This must be done within 14 days of the vote. Creditors are also advised of the closure within 28 days.

Step 2: The liquidator sells all company assets and distributes the proceeds. Outstanding debts to creditors are settled first.

Step 3: The liquidator ensures that all work and contracts are completed, and any outstanding legal issues are resolved.

Step 4: The liquidator keeps directors, shareholders and creditors updated on the proceedings.

Distribution of Funds to Members: 1 to 2 months

Once all creditors have been paid, any remaining monies can be distributed to shareholders.

Preparing Final Accounts: 1 month

Once all assets have been realised and proceeds distributed (as well as any remaining company funds), the IP prepares the final accounts and submits them to HM Revenue and Customs. The liquidator then obtains final clearance from HMRC.

Final Company Meeting  

The liquidator convenes a final meeting with all directors and shareholders. The IP confirms that all obligations have been met and the process has been completed. The IP also presents members with final accounts.

The company is now officially closed, and the liquidator will file the final documents with Companies House. The IP must also file a second notice in the London Gazette to reconfirm the closure.

The members’ voluntary liquidation is now complete, and the company will be removed from the Companies House Register. This takes up to 3 months.

Irwin Insolvency – Expert Guidance for Your MVL

On average, an MVL takes from 6-12 months to complete, but certain factors can affect this timeline. Complex assets, a large number of creditors and outstanding legal issues all have an impact.

The best way to discover how long does a members voluntary liquidation take for your company is to discuss your situation with an experienced insolvency practitioner. Your IP will administer the process efficiently and as swiftly as possible.

Don’t leave your MVL to chance. Our experienced IPs have the best solution for your business.

Call us today for a free consultation