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Declaration of Solvency

What is a Declaration of Solvency?

By Tips & Advice No Comments

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…

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buying companies in liquidation

A Guide to Buying Companies in Liquidation and Administration

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If you are considering buying companies in liquidation or administration there are various important considerations to make, especially as an insolvent company will have been facing financial problems, leaving you with a raft of challenges to overcome before you can think about getting the business back on track and start making a profit. With this in mind, here’s a look at everything you should be bearing in mind when buying companies in liquidation and administration.

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What is a Pre pack Sale in Administration in the UK?

What is a Pre pack Sale in Administration in the UK?

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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.

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Beware Bounce Back Bite Back?

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The UK’s first quarter figures for corporate insolvencies were almost 40% lower than the corresponding quarter for 2020. No surprise really, given the level of Government support to business these last 12 months. Part of this support has been in the form of the Bounce Back Loan Scheme [“BBL”] aimed specifically at the SME market whereby the Government has guaranteed 100% of the loan up to the maximum loan available of £50,000. The figures are truly astounding, with £46.6b of BBLs having been approved by 21 March 2021 and shared amongst over 1.5m qualifying claimants. There has been much speculation regarding fraudulent claims, particularly as the Office for Budget Responsibility has itself predicted a default rate of 40% on BBL and Coronavirus Business Interruption Loans.  In a classic case of closing the barn door after the horse has bolted, the Government is proposing new legislation to try and close a...
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effect of cva

Capital Gains Tax and the End of Entrepreneurs’ Relief

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Capital Gains Tax and the end of Entrepreneurs’ Relief? On the 14th of July this year, in the midst of the Coronavirus Pandemic, with Her Majesty’s Government helicoptering money throughout the United Kingdom, the Chancellor of the Exchequer decided that now was the time to order a review of Capital Gains Tax [CGT], to consider how gains are taxed compared with other types of income as it applies to individuals and small businesses. A burning issue, I think you will agree, in these unprecedented times. And who is to undertake this review? Why, the Office of Tax Simplification. And what is the OTS? Well, it terms itself as an “independent office of HM Treasury” [I think my old English Teacher would have referred to that as an oxymoron] which according to its website gives “independent advice to the government on simplifying the UK tax system, to make thing easier for...
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Entrepreneurs in the cross hairs

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25 November 2019: "Entrepreneurs in the cross hairs" 2019 UK Election Manifesto Commitments from the main parties to the UK Entrepreneur “Cross Hairs” noun a pair of fine wires crossing at right angles at the focus of an optical instrument or gunsight, for use in positioning, aiming, or measuring. Example: "I raised my rifle and got the deer in the cross hairs" “Entrepreneurs” noun persons who sets up a business or businesses, taking on financial risks in the hope of profit. Example: "I raised my rifle and saw many entrepreneurs in the cross hairs" “Entrepreneurs Relief” definition is a tax relief that reduces the amount of Capital Gains Tax when you dispose of shares in your business. It results in a tax rate of 10% [instead of 28% on other capital gains] on the value of the disposal and you can claim as many times as you like up to...
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