Commentary

D6.428 Demerger by Insolvency Act liquidation—conditions

Corporate tax
Corporate tax | Commentary

D6.428 Demerger by Insolvency Act liquidation—conditions

Corporate tax | Commentary

D6.428 Demerger by Insolvency Act liquidation—conditions

For a company to meet the necessary conditions to qualify as a liquidation under the Insolvency Act provisions several factors must be present.

In its most usual form an Insolvency Act liquidation scheme (often known as a Section 110 Scheme)1 involves the solvent liquidation of a parent company (pursuant to a special resolution of the shareholders of the parent to wind up the company) and the transfer by the liquidator of the parent company's assets to two or more newly formed companies. It is also possible for an insolvent company in creditors' voluntary liquidation to implement a Section 110 Scheme, either with the sanction of the court or the liquidation committee.

Each new company issues shares to the shareholders (in satisfaction of the shareholders' rights) of the liquidated parent company in consideration for those assets. The parent company is

To continue reading
View the latest version of this document, as well as thousands of others like it, sign in to TolleyLibrary or register for a free trial