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Difference between an MVL and a CVL

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Understanding the difference between an MVL and a CVL

Written by Jonathan Munnery

MVLs and CVLs are both formal liquidation processes, however, there is a key difference. A CVL is an insolvent liquidation process suitable for companies who are experiencing financial issues and have a number of outstanding liabilities which they are not in a position to settle.

MVLs, however, are designed as a way for solvent companies to be closed down while allowing for any money tied up in the company to be extract in a cost-effective and tax-efficient manner. Both processes do require the input of a licensed insolvency practitioner, who will be responsible for liquidating company assets and ensuring outstanding liabilities are dealt with.

In the case of a CVL, the money obtained through the selling of company assets will be distributed amongst outstanding creditors; whereas this money would be paid out to shareholders in an MVL. In both processes, the end result is the company being wound down and removed from the Companies House register. Which process is right for you is determined by your company’s financial position at the time of liquidation.

Although nobody goes into business expecting their company to fail, UK Liquidators were supportive and helpful through the whole liquidation process, and I would have no hesitation recommending them to others in the same position.
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Common Liquidation Questions
Difference between an MVL and Dissolution

An MVL is a formal liquidation process which must be undertaken with a licensed insolvency practitioner.

What is a Members’ Voluntary Liquidation?

A Members’ Voluntary Liquidation – or MVL – is a formal liquidation process designed as a way for solvent companies to wind down their operations.

Is an MVL right for my company?

MVLs are only suitable for solvent companies. However, if your company is solvent and has over £25,000 to distribute, and you are looking to close down the business and extract these profits, then an MVL is likely to be the best solution.

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If you are considering liquidation for your company, taking expert advice at an early stage is crucial. At UK Liquidators, our team of licensed insolvency practitioners are committed to providing limited company directors with the help and advice they need to make an informed decision.

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