A new comprehensive study, commissioned by the Insolvency Service, has concluded that Members' Voluntary Liquidations (MVLs) are operating effectively across England and Wales. The research, which analysed over two thousand cases, found that this formal process for solvent companies successfully ensures all creditors are paid in full in the vast majority of instances.
An MVL is a structured procedure allowing solvent companies that have reached the end of their operational life to close down in an orderly fashion. Directors must first confirm the company's ability to meet all its liabilities within a statutory timeframe before appointing a licensed insolvency practitioner to manage asset realisation, debt settlement, and distribution of any surplus to shareholders.
The study, which examined 2,309 MVL cases between 2016 and 2024, is the first large-scale analysis of its kind. Key findings revealed that creditors were paid in full within 12 months in 95 per cent of the closed cases reviewed. Instances where creditors remained unpaid beyond this period were found to be rare, underscoring the process's efficiency.
Furthermore, the research highlighted the robustness of the MVL process, with only seven out of the 2,309 cases converting from an MVL to a Creditors' Voluntary Liquidation (CVL) – the equivalent process for insolvent companies. Of these, only one resulted in a director disqualification, indicating that companies entering MVL are genuinely solvent and well-managed in their final stages.
Claire Hardgrave, Co-Director for Strategy, Policy and Analysis at the Insolvency Service, commented on the findings: "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." The study was also commissioned to assess the potential impact of a recent High Court ruling regarding the 12-month payment period for creditors and interest, a case currently subject to appeal.
All MVL liquidators are regulated professionals and licensed insolvency practitioners, subject to anti-money laundering legislation and required to submit suspicious activity reports if necessary. This regulatory oversight further contributes to the confidence in the MVL process as a transparent and effective mechanism for company closure.