There are cases when even a solvent company validly decides to cease trading and wind up its affairs. In such instances a Members Voluntary Liquidation will be called for.
Now an MVL, short for Members Voluntary Liquidation, is nothing new anymore. As a matter of fact it has been around for quite some time already and has been used by a number of companies all over the world.
Defined, an MVL is a procedure taken by a solvent company that puts it in liquidation. Its assets are to be sold with the proceeds redistributed to all stakeholders with priority given to creditors. In order for it to take its place, the board of directors must first congregate with the majority favoring the winding up process. It is after this where a board resolution shall be passed. Moreover, the company has to prove that it is indeed financially stable and capable of fulfilling its obligations to its creditors as they mature within a twelve month period.
So why will a solvent, fully operational and financially stable entity want to close its doors and cease trading? There are valid reasons to it as mentioned earlier and below are some of them.
First of all, each and every organization or entity is put up for a cause, a reason or a purpose. Once that has been completed and attained in full, the entity may find it necessary to wind up. This is quite common in many not for profit organizations and those that are only intended to live up to a certain time frame.
There too is the family owned and run companies. In cases where no heir or successor steps up, the board may find it viable to liquidate and redistribute its assets back into the owner’s pockets where they may be used for personal reasons or reinvested back in other ventures.
Third, the loss of a key member to the company and an impending risk also make the MVL viable. The death, retirement or resignation of a key member can pose huge risks and possible losses to the company. To avoid it, liquidation may be done. This is particularly applicable to companies that are heavily dependent on the expertise of a specific person or groups of experts.
Lastly, retirement is one of the most common reasons for a Members Voluntary Liquidation. After all the years of hard work, owners may want to get their investments back and spend it leisurely after all those years of working from nine to five if not more.
You can read more no MVL here www.aabrs.com