Here at Walsh Taylor we are keen not to bombard clients with technical jargon. After advising numerous people in precarious financial situations over the years, our insolvency practitioners understand that one of the last things they would want is to be confused.

Having said that, there are terms that business owners would find helpful to know. In addition to possessing a glossary page on our website, that is exactly why today we are outlining the key differences between liquidation and dissolution.

To do this we will split it into five key sections: ‘prompting proceedings’, ‘likelihood of director liability’, ‘cost’, ‘ease’ and ‘when an organisation is insolvent’.

Firstly, however, we should make a few things clear. Compulsory liquidation, creditors’ voluntary liquidation (CVL) and members’ voluntary liquidation (MVL) are the three types of liquidation procedure that exist here in the UK.

The first two can only be applied to insolvent businesses that cannot pay their creditors in full and which are no longer viable, whereas MVL is – as well as dissolution – is a possible route for solvent companies to close down.

An MVL allows for assets within the company to be realised and distributed to the shareholders in a tax efficient way and is therefore the preferred route for shareholders of companies with assets rather than dissolution.

Prompting proceedings

A MVL needs the agreement of at least 75% of the company’s members before proceeding, whereas with dissolution, providing the other eligibility requirements have been met, the directors are able to start the process themselves.

Likelihood of director liability

As a result of a MVL being administered by a licensed insolvency practitioner, the likelihood of personal liability on behalf of the directors is lessened. Dissolution, on the other hand, can carry a higher risk.

Cost

Due to the cost of the professional fees involved, a MVL is typically more expensive than a dissolution however the tax benefits that an MVL provides generally make this a cost effect route for companies with net assets of over £25,000.

Ease

Once the shareholders have opted to close their business through a MVL, the procedure is carried out by an insolvency practitioner. Conversely, dissolution involves directors taking specific and careful steps to ensure that all aspects have been completed in the correct manner.

When an organisation is insolvent

Should a company be found to be insolvent after going into a MVL then the procedure changes into a CVL. If it is found out that directors have signed a declaration of solvency in full knowledge that the organisation was insolvent, their actions will be investigated. Comparatively, a dissolved business can be restored back to the register if a creditor makes a claim later. That creditor would have to apply to have it restored, and if accepted, the situation would be treated as though the dissolution had never occurred.

With an excellent reputation for supporting UK companies and their directors through both routes, Walsh Taylor can help clients with MVL and dissolution.

If you would like any more information on the above then please feel free to get in touch with our Leeds, Harrogate, Bradford or Darlington teams today by calling our head office on 03300 244 660.

Mary Taylor
Director

Mary began working in insolvency for a national accountancy practice in Glasgow thirty years ago and worked in most divisions of the insolvency department.

She then moved to a smaller firm so she could advance her knowledge on a more hands on basis. She moved back to Leeds in 1987 and commenced working with a small firm of accountants and subsequently made partner.

She left in 1999 to set up her own practice, McCann Taylor.
McCann Taylor became involved with the consumer market both in England and Scotland.

Mary sold McCann Taylor in March 2007 and formed Walsh Taylor to concentrate on helping businesses experiencing financial difficulties.

Kate Ellis (neé Breese)
Insolvency Practitioner

Kate has worked in insolvency since 2001 starting out at a firm of solicitors in Leeds and latterly gaining positions within two national accountancy firms.

During this time Kate gained extensive experience in all aspects of personal and corporate insolvency, for the first part of her career specializing in personal insolvency and latterly corporate.

Kate has been with Walsh Taylor since its incorporation in September 2008.

Kate is CPI and JIEB qualified, is experienced in a variety of industries and sectors and is the firm’s joint appointment taker.

Meg Heath
Director

Meg has a background in supporting SMEs, including the raising of finance and advising on organisational change. She is a non-executive director of companies in the private and third sector, including Walsh Taylor.

Previously she was Deputy Fund Director of one of the largest CDFIs in the UK, and has experience of the social enterprise, charity and private sectors. Her experience of assisting companies to survive and thrive has been gained across a broad range of sectors and in companies of all sizes.

In addition to her work at Walsh Taylor she works for other private companies, including non-executive and trustee positions.

Emma Mifsud
Insolvency Practitioner

After graduating from Leeds University in 2005 with a BA Hons degree in Criminology, Emma worked for a regional law firm in both the property department and insolvency and banking department. Whilst doing so Emma gained a Graduate Diploma in Law at BPP University.

Emma then joined a national accountancy firm in 2009 gaining experience in personal insolvency before moving to a Leeds based firm. At this firm Emma specialised in bankruptcies, IVA’s and negotiating informal agreements with creditors. In 2013 Emma gained her CPI qualification.

Since joining the firm in December 2013, Emma has taken on a portfolio of personal and corporate insolvency cases to extend her knowledge and expertise in all areas of insolvency.

In December 2017 Emma become a licensed appointment taker under the Insolvency Practitioners Association, she is JIEB qualified.

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