A Members Voluntary Liquidation can be used in many ways and for various reasons, a popular one being that for purposes of retirement. Another one includes that of reinvesting your money. Entrepreneurs and owners may want to liquidate the company in order to withdraw their share in it and open up a new shop, invest in stocks and real estate or put them somewhere else where they are bound to grow and make even more profit.
Sometimes, opportunities knock on your door and they are not only feasible and promising but also something that stirs your interest. Entrepreneurs are known to be risk takers and at the same time they do not settle for less. There’s always the pursuit for growth, expansion, success and achievement. At the same time, one cannot simply withdraw all your capital in your business in just one snap. You need formalities and a legal process to do it. This is what an MVL is called for. It seeks to formally close down the solvent entity, liquidate its assets, pay creditors and distribute to owners and/or shareholders.
During the course of the process, the company must first come up convene with the shareholders and majority of the board must agree to the MVL. Thorough examination shall also be done in order to prove the actual state of the company’s financial affairs. An evidence to prove its solvency should be present. A liquidation professional and practitioner will also be called for. Meetings with the shareholders and creditors will arise too and a liquidator shall be assigned. The process continues and assets are liquidated with proceeds distributed accordingly with priority given to creditors first. Paper work and taxes shall also be filed. After the shareholders and owners receive their share, they can then use it in any way they want such a put it up for investment somewhere else.
The Members Voluntary Liquidation or MVL is a process that is only available for solvent entities. This means that only those that can fulfill their obligations as they become due for at least a twelve month period are allowed to take it. If this is not the case and the entity is instead an insolvent one, a Creditors Voluntary Liquidation or CVL will run its course instead. Remember that you cannot use the MVL to write off and run from your unpaid obligations.