Solvent Liquidation help please

[smd]

Hi, I am a shareholder/director of a company that has gone into Solvent Liquidation MVL. We are going our seperate ways and saw this was the best way forward. Basically it is a Holding Company and we have sold the propertys and completion date is set. There is a small amount for creditors to be paid and the remainder to the Shareholders. What I would like to know, How long does it take for the Liquidator to pay the shareholders from completition date. Can they hold onto our money?

Comments appreciated.

 

[CompanyRecovery]

You will be asked to make a declaration of solvency that must be made within 5 weeks of appointing the IP.

Be careful though as if the company is insolvent then the IP will convert the liquidation into a CVL.

If all is well the process will be finished within the 12 month statutory time period.

Can you not approach the IP? Who appointed him?

 

[smd]

Hi, we have already made declaration of solvency and it is not insolvent. All paperwork have been processed, all it is now is waiting for the sale in December, we dont owe very much but what we do owe, we are paying the Creditors. The money will be with the Liquidator on the Sale of the properties, I just wondered how long they keep it. Many thanks,

 

[smd]

It was a Shareholders Voluntary Liquidation, so we appointed him.

 

[Alan R Price]

Hi, I am a shareholder/director of a company that has gone into Solvent Liquidation MVL. We are going our seperate ways and saw this was the best way forward. Basically it is a Holding Company and we have sold the propertys and completion date is set. There is a small amount for creditors to be paid and the remainder to the Shareholders. What I would like to know, How long does it take for the Liquidator to pay the shareholders from completition date. Can they hold onto our money?

Comments appreciated.

I am an IP.

How long it takes the liquidator to distribute funds will depend on a number of issues, such as the nature and value of the assets; nature and number of creditors; and probably most importantly how complex its tax affairs are.

If a company is cash-rich it is sometimes possible to make a payment on account to shareholders on day one of the liquidation, subject to receiving their indemnities against any unforeseen liabilities or costs, and keeping a cash reserve for contingencies. A liquidator can also distribute assets to shareholders "in specie", that is, transfer them to the shareholders directly instead of having to turn them into cash. This often keeps the costs down.

What can keep an MVL open is delays experienced with HMRC giving "tax clearance" for the case to be closed: before the liquidator can make a final distribution to shareholders and close the case HMRC must confirm to him that there are no outstanding taxation issues and agree the final tax liability, if any. This can often take many months and may be down to how frequently the liquidator chases up HMRC. Of course, every time he chases it adds to the liquidation costs, which irritates the shareholders.

In your case, depending on the size of the surplus from the sale of the properties, it may be possible for the liquidator to make a distribution almost immediately after he has received the funds, bearing in mind that he must make provision for corporation tax on any taxable gains arising on their sale and any tax liability from the final period of trading.

It would have been good practice (but not obligatory) for your appointed liquidator to have advised you at the outset of the procedures required to complete the liquidation and given you an estimated timescale and programme to completion. If you do not have this, you can write and ask him for one. The costs should have been estimated in the statutory declaration of solvency so you should have an idea of what sort of return to expect and of course the shareholders have to give final sanction to the liquidator's remuneration, so if his costs are higher than expected you are entitled to a detailed explanation of the reasons.

 

[smd]

Thank you. Yes its 4 properties being liquidated, so there is a substantial cash amount to be distributed. There are only 5 creditors. I thought it was to do with the HMRC, as they discussed the tax with my husband so we are aware how much tax we pay. That makes sense.