The Pros and Cons of an Members Voluntary Liquidation (MVL) Vs. Deregistration (Strike-Off)
In the context of Liquidation and Insolvency, the most familiar type of appointment that comes to mind is the Creditors Voluntary Liquidation (CVL). The stigma associated with liquidations can be severely negative, however not much is known about the conducts of MVLs.
Voluntary Administration (“VA”) offers a unique opportunity to rehabilitate a company whose director may not be as financially aware or understand the intricacies of the company’s affairs and much needed depth for their businesses.
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A Creditors Voluntary Liquidation involves the directors and shareholders resolving to wind up the affairs of the company due to the insolvency of the business and effectively stop trading.
A Creditors Voluntary Liquidation can occur when a company has been placed into voluntary administration and a proposal for a Deed of Company Arrangement has not been accepted by creditors or terminates.
The purpose of a Deed of Company Arrangement is to formalise a proposal made by the directors during the Voluntary Administration, which has been approved by creditors. A Deed of Company Arrangement is a legally binding document between the company, its creditors and the Administrator.
When a business encounters financial difficulties it can be disturbing and traumatic, especially if you are the only one carrying the burden. It is important to have a professional advisor to call on that will provide understanding and advice to ease the financial stress, therefore allowing you to get on with more productive matters.