Members Voluntary Liquidations: Part 1: A Declaration of Under Use?

Abstract

In this two-part article series the authors intend to explore the practical use by private limited companies of the members' voluntary liquidation ("MVL") procedure as contained in the Insolvency Act 1986 ("IA 86").1 The procedure, although subject to legislation contained within the IA 86, relates to solvent companies and is generally used to bring a company to a formal end and to distribute its surplus assets.2 This first article will explore the MVL procedure3 and its use in practice, with some practical case study examples. The second article will compare the MVL procedure, particularly the scheme of reconstruction provisions contained in s.110 IA 86,4 with the scheme of arrangement provisions contained in ss.425-427A Companies Act 1985 ("CA 85"), and the striking-off provisions contained in s.652A CA 85. The central thesis through both articles is that MVLs are an inexpensive procedure which could be used more frequently and effectively to reconstruct a group of companies or to convert a single company into a more profitable entity.

Keywords: insolvency, members voluntary liquidation, restructuring, creditor, debtor, solvent reorganisation

JEL Classification: K00