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A Members’ Voluntary Liquidation is a formal process used by solvent companies that have reached the end of their useful life.
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The research was commissioned to improve understanding of the MVL landscape.
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The research looked at 2,309 MVL cases between 2016 and 2024.
A new research study commissioned by the Insolvency Service has found that Members’ Voluntary Liquidations (MVLs) are operating effectively, paying creditors in full in almost all cases.
A MVL is a formal process used by solvent companies that have reached the end of their life and to ensure they can close in an orderly way, while paying all creditors in full.
The study, looking at more than two thousand cases, is the first large-scale analysis of MVL outcomes in England and Wales.
It was commissioned to improve understanding of the MVL landscape and to assess the potential impact of a recent High Court ruling which interpreted the law to require that all creditors and interest be paid within 12 months of an MVL’s commencement. The case is currently subject to appeal.
The research found that Members’ Voluntary Liquidations are achieving their core objectives.
Key findings
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Creditors were paid in full within 12 months in 95 per cent of the closed cases examined.
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Scenarios where creditors remained unpaid beyond 12 months were found to be rare.
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Only seven out of 2,309 cases converted from MVL to Creditors’ Voluntary Liquidation (CVL), and one of these resulted in a director disqualification.
Members’ Voluntary Liquidations A Statistical Review of MVL Practice and Outcomes – GOV.UK
The Insolvency Service’s Co-Director for Strategy, Policy and Analysis, Claire Hardgrave, said
This research provides the clearest picture to date of how Members’ Voluntary Liquidations operate in practice.
The findings show that MVLs play an important role in the economy, with creditors being paid in full in almost all cases and these companies able to close in an efficient way.
We will continue to monitor the landscape closely and ensure the insolvency framework continues to support economic confidence.
More about Members’ Voluntary Liquidations
A Members’ Voluntary Liquidation (MVL) is a formal process used by solvent companies that have reached the end of their useful life.
Directors must confirm that the company can meet all its liabilities within the statutory timeframe before appointing a licensed insolvency practitioner to realise assets, settle liabilities, and distribute any surplus to shareholders.
There is no legal requirement to conclude a MVL within 12 months. The legal requirement considered by the court case is that creditors must be paid within this period. Payments to members (i.e. shareholders) have no statutory time limit
Where a MVL is found to be insolvent, the liquidator must take steps to convert it into a creditors’ voluntary liquidation (CVL), the insolvent version of voluntary liquidation. Where this happens, the CVL liquidator must report on the directors’ conduct to the Insolvency Service. Where sufficient misconduct is shown – and it is in the public interest to do so – directors may face disqualification action in these cases.
All MVL liquidators must be licensed insolvency practitioners, who are regulated professionals. Insolvency practitioners are supervised for anti-money laundering purposes and must abide by all requirements of anti-money laundering legislation, including submitting suspicious activity reports where suspicious behaviours are identified.