In terms of preparing to liquidate a company, we offer the necessary advice and support needed to help shareholders & directors through the liquidation process. This applies to situations where the company is insolvent or solvent. The liquidation process is highly regulated; we have devised procedures to ensure the process runs smoothly and cost effectively, all deadlines are met, and reports are filed.
In solvent situations we manage the entire process from preparing the Declaration of Solvency and all the procedural steps necessary for the calling of the Extraordinary General Meeting (EGM). We assist with the necessary filing requirements and statutory notifications, as well as realising the assets of the company and effecting the most tax efficient distribution of any surplus.
In insolvent situations, we advise directors on their responsibilities and ensure all statutory measures have been taken to arrange the creditors meeting and prepare the statement of affairs.
We can also advise clients who are creditors of insolvent companies and worried about recouping their monies, including advising on retention of title where applicable. We can attend creditors’ meetings for clients to ensure their position is protected and included in the order of payment.
Creditors’ Voluntary Liquidation (CVL) – v – Members Voluntary Liquidation (MVL):
Creditors’ Voluntary Liquidation:
A Creditors’ Voluntary Liquidation is the liquidation of a Company that cannot pay its debts as they fall due. The process is initiated by the Company itself when the Directors realise that the Company is insolvent, they are bound by the Companies Acts to place the Company into liquidation.
Directors duties for an insolvent Company:
Must immediately act to protect the assets of the Company, prepare to cease trading and organise the orderly wind-down of the Company. Whilst it is the Directors duty to arrange the Creditors meeting, in practice, O’Donovan Lavin will assist in the arrangement of issuing notification to all classes of Creditors, the advertisement of legal notices in newspapers, the booking of a meeting room and, if required, the provision of a specialist insolvency solicitor.
Director requirements for the Creditors meeting:
Directors are responsible for the presentation of two documents for the meeting of Creditors – The estimated Statement of Affairs of the Company and the Chairman’s Statement. The Estimated Statement of Affairs provides a summary of the existing assets and liabilities of the Company at the date of the said meeting. The Chairman’s Statement is a narrative of the Company history, detailing the Company background and outlining the primary reasons for the liquidation of the Company. These documents can be completed by the Directors with or without the assistance of their financial advisors.
Liquidators role after appointment at the Creditors Meeting:
- Take possession of all the Company’s assets, including books of account and other documents relevant to its affairs.
- Collate a list of people who are owed money and how much they are owed.
- Realise any assets and debtors of the Company.
- Liaise with employees to finalise any claim they may have against the Company. In the event that the Company does not have the funds available to meet the Redundancy and Insolvency (Arrears of Wages, Holiday Pay, Minimum Notice & Pension Contributions), the Liquidator will prepare all employee forms and liaise with the Department of Social Protection.
- Verify the validity of charges and any prior insolvency appointments.
- Disclaim any unprofitable contracts.
- Investigate into the Company’s affairs. The Liquidator has an obligation to prepare a report for the Director of Corporate Enforcement on or before the six month anniversary of the date of his appointment as Liquidator to the Company.
- Distribute any dividend to Creditors in line with their preferential status.
Members Voluntary Liquidation:
A Members Voluntary Liquidation is the process whereby a solvent Company winds down in an orderly fashion and the assets or cash left in the Company are distributed to the Shareholders.
When is an MVL suitable:
This method of liquidation is open to any solvent Company that has either discharged its debts or will undertake to discharge those debts within a 12 month period of time.
O’Donovan Lavin’s role in MVL process:
- Prepare all statutory documentation for the liquidation.
- Organise and schedule all various meetings required.
- Fixed fee approach – Inclusive of cost of advertising, filing fees and Solicitor/Commissioner of Oaths.
- Provide informative tax advice in advance of commencing the process.
- O’Donovan Lavin facilitate MVL meetings in our own offices.
Key advantage of an MVL:
Can be a tax efficient way for shareholders to extract funds from a Company on cessation of trade as a capital gain on shareholders’ funds will be subject to Capital Gains Tax. Where such funds were taken out as a salary or a dividend prior to the liquidation, these monies would be taxed at the shareholders marginal income tax rate.
Retirement Relief in an MVL:
Retirement Relief is relief on the Capital Gains Tax due from an MVL. It should be noted that an individual does not actually have to retire to avail of this relief, just to be over the age of 55.