Members Voluntary Liquidation in Australia: Handling Company Assets

A Members’ Voluntary Liquidation (MVL) is a voluntary process initiated by a solvent company to wind up its affairs, close the business and distribute assets among shareholders. During a Members’ Voluntary Liquidation (MVL), the fate of the company’s assets is determined by a series of steps outlined in the Corporations Act 2001 (Cth).

At the Liquidation Advisory Centre, we have over 30 years of experience and can guide you through a Members’ Voluntary Liquidation (MVL) process. When you have all the facts, you can make informed decisions, and we understand how stressful and complex this process can be. With our expert team, you will be in safe hands with us. Let’s explore what happens to your company’s assets during an MVL:

Appointment of Liquidator

The first step in a Members’ Voluntary Liquidation (MVL) is the appointment of a liquidator by the company’s directors and stakeholders. The liquidator’s role is to realise the company’s assets, settle its liabilities, and distribute any surplus among shareholders per their entitlements.

Asset Realisation

Once appointed, the liquidator will take control of and realise the company’s assets. This may involve selling assets such as property, equipment, investments, or intellectual property rights to convert them into cash.

Settlement of Liabilities

Before distributing assets to shareholders, the liquidator must settle the company’s liabilities, including debts, taxes, and any outstanding employee obligations. Creditors are paid per the priority regime set out in the Corporations Act, with employee entitlements and secured creditors usually taking precedence over unsecured creditors.

Distribution to Shareholders

After settling the company’s liabilities, the liquidator distributes any remaining assets among shareholders in proportion to their shareholdings. This distribution may take the form of cash payments or the transfer of assets, depending on the nature of the assets and the shareholders’ preferences.

Declaration of Solvency

As part of the Members’ Voluntary Liquidation (MVL) process, the company’s directors must declare solvency, confirming that the company can pay its debts in full within 12 months. This declaration is made in writing and lodged with the Australian Securities and Investments Commission (ASIC) before the MVL commences. The team at the Liquidation Advisory Centre can help you prepare and lodge this required paperwork with ASIC, ensuring compliance and that you are meeting all your obligations.

Reporting to ASIC

Throughout the Members’ Voluntary Liquidation (MVL) process, the liquidator must report to ASIC on various matters, including the progress of the liquidation, asset realisation, creditor payments, and distributions to shareholders. ASIC oversees the conduct of liquidators and ensures compliance with legal requirements.

Handling Company Assets During a Members Voluntary Liquidation

In a Members’ Voluntary Liquidation (MVL), the company’s assets are realised, liabilities settled, and the remaining surplus is distributed among shareholders. The process is initiated voluntarily by solvent companies seeking to wind up their affairs in an orderly manner.

By appointing a liquidator and following the prescribed steps, companies can ensure the efficient and equitable distribution of assets to shareholders while complying with legal requirements and regulatory oversight.

With over 30 years of experience, the team at the Liquidation Advisory Centre can help you navigate the complexities of Members’ Voluntary Liquidation and maximise the returns for shareholders.