Case Study - Members Voluntary Liquidation Explanation & Retirement of a Greengrocers

00:07:04
https://www.youtube.com/watch?v=jZqGZx8CF9A

Summary

TLDRThe video outlines the process of a Members' Voluntary Liquidation (MVL) for a green grocer that had been in business for three decades. The owners, who were also the directors and shareholders, chose this route to retire and close the business in a tax-efficient manner. The speaker explains the steps involved, including declaring solvency, preparing necessary legal documents, realizing assets, paying off creditors, and distributing the remaining funds to shareholders. The importance of timely communication and distribution of funds is highlighted, ensuring that directors are kept informed throughout the process. The video concludes with an invitation for viewers to reach out for further discussion on MVLs.

Takeaways

  • 📊 MVL is a tax-efficient way to liquidate a solvent company.
  • 📝 Directors must declare solvency before proceeding with liquidation.
  • 💰 Realizing assets involves selling them and transferring funds to a designated account.
  • 📅 Creditors should be paid promptly to minimize statutory interest.
  • 👥 Keeping directors informed is crucial throughout the liquidation process.
  • 💵 Remaining funds are distributed to shareholders as dividends after liabilities are settled.
  • 🔍 Review files for outstanding matters before closing the liquidation.
  • 📞 Contact the liquidator for any questions regarding the process.

Timeline

  • 00:00:00 - 00:07:04

    The speaker discusses a solvent liquidation process for a grocery business that had been operating for three decades. The owners, who were also the directors and shareholders, decided to retire and opted for a Members' Voluntary Liquidation (MVL) as the most tax-efficient method, as recommended by their accountant. The speaker explains the process, which involved the directors declaring the company's solvency and providing necessary documentation, including a list of assets and liabilities. After preparing the legal documents and facilitating the liquidation meetings, the speaker began realizing the company's assets, transferring bank balances to a designated account, and selling tangible assets. The property was sold quickly due to high demand, and the speaker ensured creditors were paid promptly to minimize statutory interest. Once all liabilities were settled, the remaining funds were distributed to shareholders. The speaker emphasizes the importance of communication with directors throughout the process and encourages potential clients to ask questions about the liquidation process.

Mind Map

Video Q&A

  • What is a Members' Voluntary Liquidation (MVL)?

    An MVL is a process for solvent companies to liquidate their assets and distribute the proceeds to shareholders.

  • Why did the green grocer choose an MVL?

    The MVL was deemed the most tax-efficient way to close the business as the owners wanted to retire.

  • What is a declaration of solvency?

    It is a formal statement by directors confirming that the company can pay its debts in full within a year.

  • How are assets realized in an MVL?

    Assets are sold and the proceeds are transferred to a designated account for distribution.

  • What happens to creditors during an MVL?

    Creditors are paid off as soon as funds are available, along with any statutory interest.

  • How are remaining funds distributed to shareholders?

    After paying creditors, any remaining funds are distributed as dividends to shareholders.

  • How does the liquidator keep directors informed?

    The liquidator maintains regular communication with directors to keep them updated on the process.

  • What should you ask a liquidator before starting an MVL?

    Inquire about the timeline for distributing funds to creditors and shareholders.

  • What happens after all assets are liquidated?

    The liquidator reviews files for any outstanding matters before closing the liquidation.

  • Can I contact the speaker for more information?

    Yes, you can contact the office or send an email to discuss MVL further.

View more video summaries

Get instant access to free YouTube video summaries powered by AI!
Subtitles
en
Auto Scroll:
  • 00:00:01
    okay so um what I wanted uh to discuss
  • 00:00:06
    is a um liquidation that I did for a
  • 00:00:09
    green grossers but this was a solvent
  • 00:00:13
    liquidation um so the I think the green
  • 00:00:17
    grosses had been going for about three
  • 00:00:20
    decades um and the people that owned it
  • 00:00:24
    um owned the building and it was a very
  • 00:00:26
    successful green grossers but um after
  • 00:00:29
    being so long they wanted to retire and
  • 00:00:32
    close it all down so um m a member's
  • 00:00:36
    voluntary liquidation an mvl uh was
  • 00:00:39
    deemed the um most tax efficient way to
  • 00:00:42
    do it it was recommended by their
  • 00:00:44
    accountant um and they got in touch with
  • 00:00:46
    us um so I just wanted to discuss um
  • 00:00:50
    what this process is um and and how it
  • 00:00:53
    works practically um for the for the
  • 00:00:56
    directors and shareholders so in this
  • 00:00:58
    instance the owners were the directors
  • 00:01:01
    and the shareholders it was the same
  • 00:01:03
    people um but they um they decided that
  • 00:01:08
    they wanted to do the members voluntary
  • 00:01:10
    liquidation they provided me with all
  • 00:01:12
    the information I asked for which was um
  • 00:01:15
    essentially the assets um a list of
  • 00:01:18
    their assets and the list of the
  • 00:01:20
    liabilities um and a full set of um
  • 00:01:24
    accounts and the company was
  • 00:01:27
    solvent and the um the directors had to
  • 00:01:32
    um swear a declaration of solvency so
  • 00:01:36
    when I say swear essentially what that
  • 00:01:38
    means is in front of a solicitor they
  • 00:01:42
    have to declare that um the information
  • 00:01:45
    within the Declaration of solvency was
  • 00:01:47
    true and accurate and we were
  • 00:01:48
    comfortable it was um it listed its
  • 00:01:51
    assets which was the property um there
  • 00:01:53
    was cash at bank um and you know the um
  • 00:01:58
    tangible assets of the uh of the shop so
  • 00:02:02
    you know fridges shelving
  • 00:02:05
    Etc and um and liabilities and there was
  • 00:02:08
    just a handful of small liabilities that
  • 00:02:10
    they couldn't tie up before it went into
  • 00:02:12
    um
  • 00:02:13
    liquidation um so the directors had to
  • 00:02:15
    go and swear that that was true and
  • 00:02:17
    correct and that the company was solvent
  • 00:02:19
    I.E it can pay all its liabilities in
  • 00:02:22
    full within a
  • 00:02:24
    year um so um I prepared all that
  • 00:02:27
    documentation for them explained what it
  • 00:02:29
    was
  • 00:02:30
    um and I arranged for the solicitor um
  • 00:02:33
    to come and do and swear it in reality
  • 00:02:36
    it took about two seconds to actually
  • 00:02:38
    sign it all and go through it um because
  • 00:02:40
    I'd done all the uh the pre-work with
  • 00:02:42
    them and explanations so that was the
  • 00:02:44
    Declaration of solvency I then uh
  • 00:02:47
    prepared all the other legal documents
  • 00:02:50
    um to place it into
  • 00:02:51
    liquidation um so that was done by our
  • 00:02:54
    office and then um the meetings were
  • 00:02:56
    held that put it into liquidation now
  • 00:02:59
    now once the company was in liquidation
  • 00:03:02
    my first job was to um start realize all
  • 00:03:07
    those assets IE get all those monies
  • 00:03:09
    into the liquidation estate so um I
  • 00:03:12
    wrote to the company bank and asked for
  • 00:03:15
    that bank balance to be transferred over
  • 00:03:17
    to a designated client account I had
  • 00:03:20
    especially um for this company so there
  • 00:03:23
    was no one else's money in there um it
  • 00:03:26
    was a bank account in that company name
  • 00:03:28
    set up purely for this so the cash at
  • 00:03:31
    bank uh was transferred over into this
  • 00:03:33
    client account for them I then sold the
  • 00:03:37
    um the tangible assets so the shelvings
  • 00:03:40
    the stock had gone because it was
  • 00:03:41
    perishable Goods um but the shelving and
  • 00:03:44
    there was some fridges Etc um and that
  • 00:03:47
    and that was sold and raised a little
  • 00:03:48
    bit of money paid um the agents costs
  • 00:03:52
    which were associated with that and the
  • 00:03:55
    balance again was transferred to this
  • 00:03:56
    liquidation pot um and then the the um
  • 00:04:01
    the property was sold uh very very
  • 00:04:03
    quickly um properties are in demand at
  • 00:04:06
    the moment um and so I facilitated that
  • 00:04:09
    sale along with um a commercial agent um
  • 00:04:13
    and the property was sold and again that
  • 00:04:15
    money went into the liquidation estate
  • 00:04:18
    um so once I'd got once I'd realized all
  • 00:04:20
    the assets and we had this liquidation
  • 00:04:22
    pot I had paid off um the creditors so
  • 00:04:26
    there was just a small amount of trade
  • 00:04:28
    creditors and um I paid them as soon as
  • 00:04:32
    I could as soon as any money hit I um
  • 00:04:34
    hit that bank account I paid the trade
  • 00:04:36
    creditors because statutory interest
  • 00:04:38
    acrs on a daily basis um so I was very
  • 00:04:41
    quick in that regard and then once all
  • 00:04:44
    the liabilities had been paid along with
  • 00:04:46
    the statutory interest uh which which
  • 00:04:48
    was minimal there was a pot of money
  • 00:04:50
    left over for the shareholders um and I
  • 00:04:53
    paid um that across uh to the
  • 00:04:56
    shareholders very very quickly um and
  • 00:04:59
    they got
  • 00:05:00
    uh uh dividends through the liquidation
  • 00:05:03
    um and then um so that's only recently
  • 00:05:06
    happened but um very soon we will look
  • 00:05:09
    to uh close the liquidation um because
  • 00:05:12
    I've I've done my role which is to get
  • 00:05:14
    the Assets in pay the creditors and
  • 00:05:18
    distribute the balance to the
  • 00:05:20
    shareholders um and once we've done all
  • 00:05:23
    of that we'll just do a review of the
  • 00:05:25
    files check there's nothing outstanding
  • 00:05:27
    nothing else needs doing and we'll just
  • 00:05:29
    bring it um bring it to a close so
  • 00:05:32
    that's in reality um how the members
  • 00:05:35
    voluntary liquidation works for solvent
  • 00:05:37
    company I.E when there's
  • 00:05:41
    um when the assets exceed um the
  • 00:05:44
    liabilities um I kept the directors um
  • 00:05:48
    who were also the shareholders up to
  • 00:05:49
    date throughout the entire process so
  • 00:05:52
    they weren't worried that you know they
  • 00:05:54
    were neglected or they were one of a
  • 00:05:55
    hundred cases that's absolutely not the
  • 00:05:57
    case I kept them full fully up to date
  • 00:06:00
    and they could always um ask me
  • 00:06:01
    questions but we kept them up to date so
  • 00:06:04
    they were reassured that we were working
  • 00:06:06
    as quickly as we could and I paid those
  • 00:06:09
    um creditors as soon as I could to
  • 00:06:11
    reduce um that statutory interest you
  • 00:06:14
    don't want a liquidator to sit on the
  • 00:06:17
    money not distribute it and it goes in a
  • 00:06:21
    queue Etc because that's costing you
  • 00:06:22
    money um so I think that's important to
  • 00:06:26
    um to know when you um are looking for a
  • 00:06:29
    liquid dat to do a sell liquidation and
  • 00:06:32
    so ask them you know how quickly will
  • 00:06:33
    you distribute the money to the unsecure
  • 00:06:36
    creditors and also to the shareholders
  • 00:06:37
    because you want that money as well so
  • 00:06:39
    just say you know do you keep you know
  • 00:06:41
    how long do you keep on hold of that
  • 00:06:42
    money for when did you do the
  • 00:06:44
    distribution do you keep a reserve Etc
  • 00:06:47
    um so those are some questions that you
  • 00:06:49
    need to bear in mind um but if you want
  • 00:06:51
    to chat um about a member's voluntary
  • 00:06:54
    liquidation with me feel free to contact
  • 00:06:56
    the office or send me an email um and um
  • 00:06:59
    happy to discuss it with you okay thanks
  • 00:07:01
    very much thank you
Tags
  • Members' Voluntary Liquidation
  • MVL
  • solvent liquidation
  • green grocer
  • declaration of solvency
  • asset realization
  • creditor payment
  • shareholder distribution
  • liquidator communication
  • business closure