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A Statutory Declaration of Solvency [the Declaration] is a key document in the liquidation process for a Members’ Voluntary Liquidation [MVL]. An MVL is a solvent liquidation procedure where, from the outset, it is envisaged that all creditors will be paid in full. Prior to the passing of the Special Resolution by the Shareholders to place the company into liquidation, both directors [if there are only 2] or a majority of directors [if there are more than 2] must declare before a solicitor the Declaration stating that the directors have made a full enquiry into the affairs of the company and are satisfied that it will be able to settle all its debts [together with Statutory Interest at 8% per annum payable to outstanding creditors] within 12 months of the commencement of the MVL. Under the Insolvency Act 1986 [the Act] it is a criminal offence for a company director…

A Company Voluntary Arrangement [CVA] is a formal corporate turnaround procedure that allows a company to ring-fence historic debt and reach agreement with its creditors as to how that debt is to be repaid in full or in part. It provides legal protection to the company and leaves the directors in charge of all company operations and decision making.

A Pre pack Sale is the sale of all or substantially all of the business and assets of a company that has previously entered into Administration. The sale quite often takes place on the first day of the Administration as the marketing of the business and negotiation of the sale terms has taken place prior to the appointment of the Administrator. Hence the “pre-packaged” nature of the transaction. A Pre pack is sometimes known as an “accelerated M & A” process.

An MVL is a formal legal process governed by the Insolvency Act 1986 [the Act] and The Insolvency Rules [England and Wales] 2016 [the Rules] for companies that are incorporated in England and Wales. The legislation relating to companies incorporated in Scotland and Northern Ireland is very similar to the law in England and Wales.

When a company goes into liquidation there is a formal legal process governed by the Insolvency Act 1986 [the Act] and The Insolvency Rules [England and Wales] 2016 [the Rules] for companies that are incorporated in England and Wales. The legislation relating to companies incorporated in Scotland and Northern Ireland is very similar to the law in England and Wales.