Corporate insolvency for dispute resolution practitioners: members' voluntary liquidation
Published by a LexisNexis Restructuring & Insolvency expert
Practice notesCorporate insolvency for dispute resolution practitioners: members' voluntary liquidation
Published by a LexisNexis Restructuring & Insolvency expert
Practice notes
This Practice Note contains a summary of the key points relating to a members' Voluntary liquidation (MVL) from a Dispute resolution perspective.
What is a MVL?
A MVL is a process by which a company, through the resolution of its members, decides to end its activities and move towards its eventual dissolution. Throughout this process a licensed Insolvency practitioner, who is authorised by a recognised professional body, must be appointed as liquidator over the company.
A MVL is typically used where a solvent company has served its purpose and its members no longer wish to retain it as a corporate entity. It is also used where members wish to recover their investment in a solvent company.
For further reading, see Practice Note: What is a members’ voluntary liquidation and when is it typically used?
If the company is insolvent a different method must be used, such as a creditors' voluntary liquidation (CVL) or compulsory Liquidation. For further reading on these processes, see Practice Notes:
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Corporate insolvency for dispute resolution practitioners:
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Jurisdiction(s):
United Kingdom
Key definition:
Insolvency definition
What does Insolvency mean?
This can be defined by two alternative tests (Insolvency Act 1986, s 123):
• cash flow test: a company is solvent if it can pay its debts as they fall due, no matter what the state of its balance sheet (Re Patrick & Lyon Ltd [1933] Ch 786);
• balance sheet test: a company which can pay its debts as they fall due may be insolvent if, according to its balance sheet, liabilities (including contingent liabilities) exceed assets.
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