The following Restructuring & Insolvency practice note Produced in partnership with Robert Smailes of Leonard Curtis Business Solutions Group & Simon Hunter of Three Stone provides comprehensive and up to date legal information covering:
A company enters voluntary liquidation when the members of the company vote to do so by a special resolution. For more information, see Practice Note: What is a members' voluntary liquidation (MVL) and where/when is it typically used?
Before the members can vote on a resolution, the directors of a company must assess whether that company can pay its debts within no more than 12 months. If the company can do this, they can put the company into members’ voluntary liquidation (MVL). If it cannot, they must put it into creditors’ voluntary liquidation (CVL). For more assistance on this see Checklist: Directors' due diligence questionnaire and guidance before swearing a statutory declaration of solvency for a members' voluntary liquidation.
The way that the directors state that the company can pay its debts and so can enter MVL is through the statutory declaration of solvency—Form IR 2016, r 5.1 LIQ01 Notice of Statutory Declaration of Solvency (MVL) (Declaration of Solvency attached) (Formerly form 4.70). This is a formal declaration sworn on oath before a commissioner for oaths. It must be sworn at a directors’ meeting. It must:
identify the company
state the name and postal address for each director making the declaration
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