Members Voluntary Liquidation is a process where the company that has ceased all business operations is eligible for a Voluntary Liquidation. The company is in discussion with an insolvency practitioner (IP) who will prepare and submit the Voluntary Liquidation Notice. If the Voluntary Liquidation is approved by the IP then the administrator of the company is responsible to pay off the debts of the company. This is a very useful measure that enables a company to restructure its business while paying off its debts in full. This also allows the company time to find alternative sources of revenue.
The process of Members Voluntary Liquidation involves several stages; the Companies Liquidation Authority (CVO) sets up a meeting between the voluntary liquidators and the management of the companies. The meeting is also attended by two Members of the Board of Directors (Moody’s) who also have an interest in the success of the process. The Members of the VO also play an important role in overseeing and monitoring the entire process. This enables the companies and their creditors to focus on matters such as repayment, management, and disposal of the companies’ assets.
Once the Members Voluntary Liquidation Company is established, it is up to them to advertise the company to attract potential members. Advertising is done through trade publications, newspapers, the internet and through other means such as post cards. It is important to set out clearly which services the voluntary organisation offers; to attract potential members.
Another important area of responsibility that the VLAC is held to is ensuring that all companies’ records relating to the company are maintained. They are also responsible for ensuring that all companies’ debts are paid. If any companies’ debts are not paid the VLAC must undertake immediate action to deal with the situation.
Creditors of the Company can become involved in the process by providing additional information or assets if needed. Creditors will also be able to offer advice to the management and may be able to assist with negotiations with the companies’ directors. Once a liquidation agreement has been reached, these creditors will cease all contact with the company. All correspondence between the VLAC and the creditors will now be handled by the VLAC.
As soon as a Members Voluntary Liquidation Company has been established the first step is to apply for membership. To do this, an application form must be submitted along with relevant documentation such as payslips, bank statements and relevant lease agreements. A PIN is required from each member company. Once a member has been accepted, it is important to ensure that all relevant accounts relating to the companies’ assets are frozen.
One of the primary responsibilities of the VLAC is to carry out an inventory review. This is where they assess the current state of the companies’ assets and liabilities. After this process has been completed the Companies House will provide the VLAC with the information they require to organise a voluntary liquidation. Once this document has been received by the VLAC they can begin the process of searching for potential voluntary liquidation candidates from among the companies in their sector. All voluntary liquidation candidates are evaluated on a case-by-case basis in order to find an appropriate solution to the problem faced by the company.
As soon as the results of the inventory review have been provided the VLAC will begin the formal process of arranging a meeting with all the creditors. The objective of this meeting is to explore the opportunities for any savings that may arise from a successful settlement. Once an agreement has been made the company can go ahead and complete the remainder of their business as normal. The process however will remain active and ongoing in order to monitor and record any changes that may occur with the creditors.
