Fixed Price Members Voluntary Liquidations - interview with Jeremy Frost
Posted on February 01, 2016 by Suzanne Parker
As Frost Group launches its fixed price Members Voluntary Liquidations, or MVLs, we caught up with MD Jeremy Frost to ask a few questions and find out more about this unique service.
Jeremy, what is an MVL?
I sometimes describe an MVL as a “funeral” for the company. It’s a means of releasing capital from a business when it’s at the end of its useful life.
Well, not necessarily. Times change, it could be that a contractor is moving into employment and has no need for their company anymore, or that a company has previously been run by a husband and wife team and they are bringing the children in so the current set up is no longer relevant and they need to close and start again. Everybody’s rationale is different. It can just be the end of the company, not the end of the business.
A resurrection, then?
Yes, sometimes! Although there are also situations where a company is beginning to struggle and it’s time to move on. An MVL can help there, too.
So, what do I get out of an MVL?
An MVL distributes the capital between the shareholders so rather than continuing to plough resources into a non-useful company, you receive a payout instead.
Is there a time element involved?
When agreeing to Liquidate, a Director is stating (with the acceptance of Criminal Liability if they are wrong) that the Company’s creditors, including HMRC are capable of being paid in full within twelve months.
So yes time can be seen to be of the essence but as with all things there can be complications.
Is it a complicated process?
It’s a “paper” process. We generate the paperwork to submit to HMRC and Companies House to do the MVL, so now the process is not complicated. However each Company’s circumstances are different and, sometimes for reasons that Clients themselves don’t appreciate. The example I always give is signing up to a lease a number of years ago and then reassigning it. This can result in a claim against the Company that Clients over-look.
I can do that myself can’t I?
You need the skill and professionalism to know what paperwork goes where. Our involvement ensures that there are no holes in the process. For example, even a simple “cash in the bank” situation can throw up unexpected assets and liabilities and the costs of getting wrong can be horrendous. You will need a professional liquidator registered by the Insolvency Act 1986 to liquidate the assets.
Is it eye-wateringly expensive?
No. Our Bronze fixed-fee package of £850 includes getting clearances, VAT & Disbursements reclaimed and of course, submitting the papers and managing the process from start to finish. It’s a great product and we really enjoy working on MVLs because we are helping our clients release the cash and assets from their business so it’s a very positive experience for them and for us.
Sounds good. So that’s a Bronze package, which means there must be Silver and Gold?
That’s right! Our Silver package is appropriate for more complicated situations or where Clients are looking for slightly more support; where there’s a more colourful history and where the assets are not necessarily straightforward and therefore a more in-depth advice is required.
Our Gold package is even further up the chain, solvency is likely to be more borderline and a strategy needs to be put in place to close the company down and pay creditors. This is a bespoke service depending on what
needs to be done to close the company. It will take longer than a standard MVL but it is still possible to go through the process.
How do I know if an MVL is right for me?
A good starting point is the MVL section on our website http://www.frostgroup.co.uk/members-voluntary-liqu... where you will find lots of helpful information, and of course, get in touch with us to talk through your situation
and we can advise you from there.