Are You Aware of the Practical Benefits of a Solvent Winding Up?

Introduction
A Solvent Winding Up, also known as Members Voluntary Liquidation (MVL), is often used when companies are no longer needed for trading purposes. Business owners may also want to liquidate their company in order to move property or other assets from the business to personal ownership. When planning for an MVL, it is essential that directors and shareholders consider the full taxation, commercial, and legal implications and practicalities. 

Our extensive experience with MVLs ensures that our clients obtain prompt distribution of assets from the company, benefit from one of the most tax-efficient ways of transferring assets from a company, and that the company is dissolved quickly.

What is the Role of a Liquidator Once Appointed?
The function of the liquidator in an MVL is to verify the value of the company's assets and liabilities, realize any assets, pay any business creditors, distribute the company’s net assets amongst the shareholders, and dissolve the company in accordance with the Companies Act 2014.

At Duff & Phelps we understand that speed in achieving dissolution and quick access to assets is important. We make every effort to ensure that our clients obtain the surplus assets from the company at the earliest opportunity, and that assets are not unnecessarily tied up during the winding up period.

What Steps are Involved in Winding Up a Company? 
There are numerous procedures to follow to affect the winding up of a company:

• Convene a company board meeting to resolve and prepare to put the company into MVL, and to sign the Declaration of Solvency
• The Declaration of Solvency must contain a statement of the company’s assets and liabilities, of no more than three months before the Declaration of Solvency is made
• The Declaration of Solvency must be supported by a report and statement of an independent person consenting to the Declaration of Solvency, stating that the Declaration is not unreasonable
• The resolution to wind up the company can be passed by the shareholders by written resolution, or by way of an extraordinary general meeting as set out in the Company’s Memorandum and Articles of Association. The resolution must be passed within 30 days of signing the Declaration of Solvency

Practical Considerations
When winding up a solvent company there are a number of considerations for both the company and its shareholders, outside of the company's secretarial issues. For example, the timing of meetings, account filings with the Companies Registration Office, the Office of the Revenue Commissioners and the Central Bank of Ireland, distribution of property in specie, immediate access to funds, and so on. While the issues in a winding up are typical, the circumstances of each winding up and shareholder differ. Duff & Phelps advises that the company and any individual shareholders seek independent legal, financial, and taxation advice regarding the effects of winding up on their respective legal and financial positions.

Payment of a Company’s Debts
In the statutory Declaration of Solvency, a company's directors are obliged to provide a time limit for the payment of the company’s debts in full, which is subject to a maximum time limit of 12 months. Where the debts are not paid or provided in full, within the period stated on the Declaration of Solvency under the provisions of the Companies Act 2014, it shall be presumed that the director did not have reasonable grounds for his/her opinion. If it later transpires that the company is insolvent, the directors who made the Declaration of Solvency risk being held personally liable for the company’s unpaid debts, unless they can show that there were reasonable grounds for the view which they held.

Why Choose Duff & Phelps?
Whether you are an owner manager, company director or other stakeholder, the winding up of a solvent business requires careful planning and organization to ensure that the correct steps are sequentially carried out. At Duff & Phelps, we focus on managing the process to get the best possible outcome for all involved. Clients choose us for our professional approach and the strength and depth of our experience. Our Ireland Restructuring team's considerable experience allows us to quickly untangle the complexities of each particular case, while advising relevant parties on their obligations. Through our international network, we also work for overseas multinational clients who sometimes require cross-border restructuring or winding up of certain companies.

Duff & Phelps' Ireland Restructuring team has conducted a wide variety of MVLs across different sectors, including aircraft leasing, financial services, telecoms, property, retail, tourism and leisure, IT, and pharmaceuticals. Our experience in MVLs includes: the Office of the Revenue Commissioners queries on obtaining tax clearance, engaging with financial institutions such as the Central Bank of Ireland on reporting obligations relating to licenses, dealing with associated foreign jurisdictions on banking, tax, compliance, and legal matters to ensure that a thorough review of all matters are addressed prior to finalizing the winding up, confirming the entity's dissolution as early as possible, and immediate access to assets. 

Duff & Phelps professionals have dealt with a number of complex MVLs, involving issues such as:

• Applying to the High Court to determine points of law
• Complex tax transactions
• Conversion of MVLs to Creditors’ Voluntary Liquidations
• Acting as liquidator in cases which were in the public domain (including subsidiaries of major public limited companies)