Members Voluntary Liquidation
Members Voluntary Liquidation (MVL) is a solvent liquidation procedure that enables the closure of your company where surplus funds or assets are distributed to shareholders in a tax-efficient manner.
It is usually used by owners of a business who wish to retire, or dispose of their business, and receive a return of capital or by a group of companies who wish to close a dormant, non-trading subsidiary.
Voscap works closely with the directors, shareholders, and their professional advisors to implement the MVL process in an efficient and cost-effective manner.
Creditors Voluntary Liquidation
If all other formal insolvency options aimed at rescuing the business are not appropriate it is likely that you will have to place the company into Creditors Voluntary Liquidation (CVL).
However, this process can still be a useful tool for giving a business a second chance which can be accomplished by moving the business into another entity.
If voluntary Liquidation is being used to make a fresh start, it is imperative that all legal issues and requirements are dealt with properly to ensure that the new company and its directors are fully compliant. We can guide you through the process ensuring you comply with the relevant legislation whilst achieving the best outcome for creditors.
The liquidator will deal with the affairs of the old company, agree creditor claims and will distribute any available funds to those creditors.
If the company is under financial stress it is best to seek our advice at an early stage and explore all viable options.
Administration / Pre-Packs
Administration is a formal insolvency procedure aimed at rescuing a company in financial distress.
The company will have protection from its creditors whilst the proposed Administrator, a Licensed Insolvency Practitioner, reviews and considers the company’s financial position with a view of saving the business as a going concern.
The proposed Administrator may have to trade the company in administration to achieve the best outcome and will often call on the assistance of the Directors, Shareholders, and key employees to assist in the process.
The most common outcome results in the business being sold as a going concern to a new entity. An independent agent is appointed who will assess and value the business and carry out a discreet marketing exercise.
Directors of the Company also get the opportunity to purchase the business. In fact, we often find that new investors like to retain the services of key personnel who are essential to preserving the goodwill.
Pre-packaged Administration (also known as a Pre-Pack) follows the same principle as detailed above however the main difference is that the proposed Administrator will in almost every case effect a sale immediately on, or shortly after his appointment.
The advantage of a pre-pack is the seamless transition of the business from the old company to the new company.
Safeguards have been introduced as historically creditors may not have been aware of the sale until after it had happened. We can advise on how to ensure that all the correct steps are taken and that the process is completed smoothly.
The key is to deal with the financial affairs in a timely manner to determine the best option available and avoid any adverse action against the company.
Partnership Administration order
This is similar in many ways to the Administration procedure for a limited company.
An Administrator, a Licensed Insolvency Practitioner, reviews and considers the partnership’s financial position to decide whether it can be rescued.
The administrator will take control of the affairs of the business and all actions against the partnership by creditors are frozen.
Once you have applied for a Partnership Administration Order, the court would grant the Order where it is satisfied that the partnership is unable to pay its debts and where one of the following events would be achieved:
- The continued trading of the partnership as a going concern
- Agreement to a Partnership Voluntary Arrangement (PVA) under which the debt can be restructured
- Greater asset realisation than would be possible under a winding-up action
The administrator works with the partnership on an agreed plan or a pre-pack to restructure the debt so that the business can be handed back to the partners once a successful restructuring has taken place.
Company Voluntary Arrangement (CVA)
If you have a viable and profitable business but have now fallen into debt and are no longer able to manage your cash flow, then you could consider a Company Voluntary Arrangement (CVA).
In summary, you would ask your creditors to vote on a proposal that allows your company to continue trading on the basis it will provide a better return to creditors than if the company was forced into liquidation.
If the proposal is approved, the current debts are frozen, and the plan is administered by the Supervisor of the CVA.
The CVA is a legally binding contract between the company and its creditors and requires a majority of 75% or more in value of the company’s unsecured creditors to vote in favour. Our experts here at Voscap will ensure that the proposal is fit, fair and viable before it is issued for consideration.
The CVA can also be an opportunity to bring in new capital, introduce new skills, reduce overheads, and revise operational efficiency.
Partnership Voluntary Arrangement
A Partnership Voluntary Arrangement (PVA) is a formal insolvency procedure that enables a partnership business to make a proposal to its creditors which will give them a better return than they would get if it were placed into liquidation.
It is used where there is a viable, profitable business that has been unable to manage its cash flow and requires time to breathe to be able to continue trading.
If the PVA proposal is approved, the current debts are frozen, and the plan is administered by the Supervisor of the PVA. It is a legally binding contract between the business and its creditors and can also help avoid personal bankruptcy for the partners.
The key to a successful PVA is to work closely with the partners and plan creatively and realistically through a collaborative approach and prepare the most viable and feasible proposal for all parties involved.
If a secured lender seeks to recover their debt, then it is possible for them to appoint a Receiver. This could be a fixed charge receivership, where the lender has a charge on a property or on book debtors, and the Receiver sells or realises just those assets.
Alternatively, it could be an Administrative Receivership, where the Receiver takes over the running of the company from the directors and realises all the assets.
It is important that directors do not allow the company’s position to deteriorate to such an extent that the secured lender decides to intervene by appointing a Receiver of any sort.
Early engagement with the secured lender and appropriate planning is the key to avoid a Receiver being imposed on the company.
We also have experience of acting as Court-appointed Receivers where a party that has been successful in litigation needs to use a Receiver’s powers to enforce the Court’s judgement.