Members' Voluntary Liquidations - Part 2: MVLS Compared

Abstract

This is the second part of a two-part article series.1 In Pt I the authors considered the practical use of the members' voluntary liquidation ("MVL") procedure as contained in the Insolvency Act 1986 ("IA 86"). This second article will compare the MVL procedure, particularly the scheme of reconstruction provisions contained in s.110 IA 86,2 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 is that the MVL procedure is an inexpensive underused tool that could be used more frequently and effectively to reconstruct a group of companies or a single company into a more profitable entity in circumstances when a rationalisation is sought. In this article the authors will test this thesis against the competing regimes extant in the CA 85 and discuss the relevant Company Law Review ("CLR") proposals that impact on this area.

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

JEL Classification: K00