What happens if the MVL fails and what are the exit options—the position under The Insolvency (England and Wales) Rules 2016?
What happens if the MVL fails and what are the exit options—the position under The Insolvency (England and Wales) Rules 2016?

The following Restructuring & Insolvency practice note provides comprehensive and up to date legal information covering:

  • What happens if the MVL fails and what are the exit options—the position under The Insolvency (England and Wales) Rules 2016?
  • Coronavirus (COVID-19)
  • What happens if the MVL fails, and exit from MVL

This Practice Note sets out the position from 6 April 2017.

Coronavirus (COVID-19)

This content is affected by the coronavirus (COVID-19) pandemic. For further details, take a look at our Coronavirus (COVID-19) toolkit. For related news, guidance and other resources to assist practitioners working on restructuring and insolvency matters, see: Coronavirus (COVID-19)—Restructuring & Insolvency—overview.

What happens if the MVL fails, and exit from MVL

A members’ voluntary liquidation (MVL) may be said to have failed if it becomes necessary to convert it from a solvent winding-up (an MVL) into an insolvent winding-up (a creditors’ voluntary liquidation (CVL)). This is also the first route out of the MVL for the company.

If, at any time during the MVL, the liquidator forms the view that the company is not going to be able to pay its debts in full with statutory interest as set out in the declaration of solvency, they must under section 95 of the Insolvency Act 1986 (IA 1986) provide the creditors with a notice to this effect, within seven days of coming to that decision.

The liquidator must then seek a nomination from the creditors to be made liquidator in the CVL by either a deemed consent procedure or a decision procedure (pursuant to IR 2016, r 15.3). Also see revised SIP 6 (Deemed consent and decision procedures in insolvency proceedings (England and Wales)) from 1 January 2018).

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