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Disbursements in a Members Voluntary Liquidation

Written by Robert Moore Marketing Manager 24 June 2019

A Members Voluntary Liquidation (MVL) can only be carried out by a licensed insolvency practitioner (IP), which attracts professional fees and costs. The main cost of MVLs is the fee to the IP for handling the process. An MVL fee is fixed and dependent on the complexity of the company’s financial affairs i.e. are their any creditors to pay? What assets are owned?

Additional to the liquidation fee, disbursements arise. These are smaller costs to pay and are unavoidable. They are known as the third-party costs. Initially, IP will pay for these amounts yet at the end of the process, they are charged back to the client.

Disbursements which are charged include:

  • Advertising of the company’s liquidation – this includes the series of four notices; one on appointment, resolution, as a notice for claims and for Scottish registered companies - to be placed in the Gazette, to advertise the company’s solvent liquidation. This is a statutory requirement and fees are to be charged at a cost. It enables other creditors to come forward and claim
  • Statutory bond- This is compulsory. Shareholders must take out a bond (varying between £50 and £100+) that provides security, whilst the liquidator takes control of the company. This covers any malpractice. The Bond fee depends on the assets of the company.
  • Search fee – this tends to be small.

The insolvency practitioner pays the disbursements when they are needed within an MVL. At the end of the process, they will be charged back to the client.

The liquidator can distribute a proportion of the company’s profits to shareholders early in the process – though there must be no likelihood of further creditors claiming. Indemnity’s may therefore be requested to be signed. A proportion of the company’s funds is then retained by the liquidator. From this amount, professional fees and disbursements are paid and therefore deducted. Any remaining amounts are shared among shareholders and the company officially dissolves.

Are you looking to arrange an MVL? Do you have disbursements to pay? Contact us today on 0800 970 0539 to find out more. We provide helpful, friendly advice to you; giving you the chance to discuss with our experts, your companies current situation and future plans.

Category: Liquidation

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