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Voluntary liquidation


There are two kinds of voluntary liquidation:

members' voluntary liquidation (MVL) - which means the designated members have made a statutory declaration of solvency; and
creditors' voluntary liquidation (CVL) - which means the designated members have not made such a declaration.


1. When can a limited liability partnership go into MVL?

This can take place when the designated members believe that the limited liability partnership is solvent.

A majority of the limited liability partnership's designated members must make a statutory declaration of solvency in the five weeks before the date when the limited liability partnership determined that it would be wound up, or on the date but before making the determination - see question 3.

2. What is in the declaration?

The statutory declaration will state that the designated members have made a full inquiry into the limited liability partnership's affairs and that, having done so, they believe that it will be able to pay its debts in full within 12 months from the start of the winding-up. The declaration will include a statement of the limited liability partnership's assets and liabilities as at the latest practicable date before making the declaration.

3. When does liquidation actually start?

The liquidation starts when the members determine to wind up the limited liability partnership. The means of making such a determination will usually be provided for in the partnership agreement. In the absence of any provision, the determination will be made by a decision of the majority of members.

4. Must notice of voluntary liquidation be given to anyone?

Yes. Notice of the determination for voluntary winding-up of the limited liability partnership must be published in the Gazette within 14 days of the making of the determination. The limited liability partnership must also send a copy of the declaration and the determination to the Registrar within 15 days of the date when the limited liability partnership determined that it would be wound up.

5. When may a CVL be appropriate?

A limited liability partnership may go into CVL when it cannot pay its debts.

6. What must the limited liability partnership do?

Its members determine that the limited liability partnership cannot continue in business because of its liabilities and that it is advisable to wind up. The way in which the limited liability partnership makes such a determination will usually be provided for in the partnership agreement. In the absence of any provision, the determination will be made by a decision of the majority of members.

The determination must be:
advertised in the Gazette within 14 days; and
sent to the Registrar within 15 days.
A meeting of creditors must be held in the next 14 days after the determination to wind up has been made. Notice of the meeting must be sent to the creditors at least seven days before the meeting. Also, the designated members must prepare a statement of affairs for consideration at the meeting, and appoint one of themselves to attend and preside over the meeting.

When the liquidator is appointed, the designated members must provide him or her with a statement of affairs and otherwise co-operate with the liquidator.

7. Does the limited liability partnership have to advertise notice of the meeting?

Yes. The meeting must be advertised in the Gazette and in two newspapers in the area where the limited liability partnership has its principal place of business.

8. What are the main duties of a liquidator?

The liquidator is appointed to wind up the limited liability partnership's affairs. The liquidator does this by calling in all the limited liability partnership's assets and distributing them to its creditors. If anything is left over, the liquidator distributes it among the members of the limited liability partnership.

9. Does a liquidator need to notify anyone of his or her appointment?

Yes. Within 14 days of being appointed, a liquidator must publish a notice of appointment in the Gazette and notify Companies House. If the liquidation is voluntary, the liquidator must also give notice in a newspaper in the area where the limited liability partnership has its principal place of business.

10. What does the liquidator have to send to Companies House?

The liquidator must send a statement of affairs and Form 4.20 to Companies House within seven days of the creditors' meeting.

The liquidator must also send a statement, in duplicate, of receipts and payments for the first 12 months of liquidation. After that, statements must be sent every six months until the winding-up is complete.

11. Can an MVL be converted into a CVL?

Yes. If the liquidator decides that the limited liability partnership will not be able to pay its debts in full in the period stated in the designated members' statutory declaration of solvency, then he or she must call a meeting of the creditors which must be held within 28 days. The liquidation becomes a CVL from the date of the meeting.

12. What are the requirements for giving notice in such a case?

The liquidator must:
post a notice of the meeting to each creditor at least seven days before the date of the meeting;
advertise the date of the meeting in the Gazette and in 2 newspapers in the area where the limited liability partnership has its principal place of business; and
prepare a statement of affairs for consideration at the meeting. A copy of the statement must be sent to Companies House within seven days of the meeting.


13. What happens when the limited liability partnership's affairs are fully wound up?

The liquidator presents an account to final meetings of creditors and members of the limited liability partnership. He or she must advertise the meetings in the Gazette at least one month before.

Within one week of the meeting having taken place, the liquidator must send the account to Companies House and a return of the final meeting.

Unless the court makes an order deferring the dissolution of the limited liability partnership, it is dissolved three months after the return and account are registered at Companies House.

14. Which forms should be used?

The appropriate forms are:

Form title
Number
Notice of appointment of liquidator voluntary winding-up (members or creditors)
600
Statement of affairs in conversion from a members' voluntary to a creditors' voluntary liquidation
418 & 4.20
Statement of affairs in a creditors' voluntary liquidation
4.19 & 4.20
Liquidator's statement of receipts and payments
4.68
Members' voluntary winding-up declaration of solvency embodying a statement of assets and liabilities
4.70
Return of final meeting in a members' voluntary winding-up
4.71
Return of final meeting in a creditors' voluntary winding-up
4.72
Please note: With the exception of Form 600, these forms are not available from Companies House. They can be obtained from company law stationers or by visiting the Insolvency website at www.insolvency.gov.uk/