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What are the Options for Releasing Capital from a Solvent Company

Releasing capital from a solvent company is a relatively common process in the UK and is essentially a means of raising cash from a business that has, for whatever reason, outlived its worth. In these circumstances, the aim is generally to create the parameters for an orderly winding up of the company and to see whatever value it entails extracted as efficiently and as transparently as possible.

Members Voluntary Liquidation

There are a variety of reasons why company directors and key stakeholders might decide that the time is right to liquidate a business and extract what value remains within it at that particular point. The process of achieving this outcome is generally described as being a  Members Voluntary Liquidation  (MVL); otherwise known as solvent liquidation.

Levels of complexity

When it comes to MVLs, there are differing levels of complexity that tend to be involved and some scenarios are more difficult to manage and move forward than others. There are a number of organisations that you can find online that promise to advise on the associated processes at very low prices. These service providers though are not likely to be suitably well-resourced to cope with the complexity that many MVLs involve.

At Begbies Traynor we can draw on a UK-wide network of offices and decades of experience in dealing with liquidation cases. As a result, there is no case too large or complex for us to take on and advise upon confidently from a position of real expertise and precisely relevant experience.

Tax considerations

Ordinarily, when liquidators are appointed to manage the affairs of a company being wound up, the essential aim is to extract as much value as possible from that business and its assets in order to satisfy debts owed to all and any relevant creditors. In the context of a voluntary liquidation, where the aims are generally quite different, money raised and made available after creditors have been satisfied can be subject to corporation tax and the implications should be considered and planned for very carefully. However, when handled properly, MVLs are generally a very tax efficient means of raising money from a company that isn’t insolvent but is being closed. 

Timing is crucial

As with much else in life and certainly with MVLs and liquidation processes more generally, timing is very important. For the most part, the sooner a full variety of options can be outlined and understood, the better placed a business and its directors will be to instigate and maximise the potential of a voluntary liquidation.
Whatever your situation might be, if you’re considering liquidating a solvent company then you can benefit from getting the best possible advice and support. Contact Begbies Traynor to arrange a free and confidential consultation.

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Insolvency Practitioners Association Institute of Chartered Accountants in England and Wales R3: Association of Business Recovery Professionals ICAEW Business Advice Service Turnaround Management Association ACCA (the Association of Chartered Certified Accountants) ICAS | The Institute of Chartered Accountants of Scotland
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