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Checking this is how Liquidation works

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    #11
    As an aside, MVL Online a few months ago migrated to the route of client withdrawing the cash in advance. This is temporarily a loan, then MVLO declare distributions in specie over the course of the liquidation to clear the loan. A few benefits from client perspective:
    - client gets all the cash straight away. It takes some of the big banks multiple months to process liquidator requests, which would mean painful delays to clients getting any cash,
    - client retains control of the company's cash the whole time (at no point do we touch it).

    On the negative side:
    - the bond is still payable, seems this causes more client annoyance than it used to. Legally if there's a big loan to shareholders following liquidator appointment, the liquidator could call in that debt, and theoretically then misappropriate funds. The new route doesn't avoid the bond being payable.
    - bizarrely clients were always super thankful when we made big payments to them (even though it was "their" money!)...with the new route clients are a bit more "meh!".

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      #12
      Originally posted by Maslins View Post
      As an aside, MVL Online a few months ago migrated to the route of client withdrawing the cash in advance. This is temporarily a loan, then MVLO declare distributions in specie over the course of the liquidation to clear the loan.
      why do you only do 50% approx DIS on appointment or just prior and not the full 100%?

      Surely Insurers discount the Bond if no cash involved for the Liquidator.

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        #13
        Originally posted by john@UKCA View Post
        why do you only do 50% approx DIS on appointment or just prior and not the full 100%?

        Surely Insurers discount the Bond if no cash involved for the Liquidator.
        If a creditor claim were to be lodged, we're on safer ground if we've only distributed half the funds and still have a fairly significant asset we legally control (the remainder of the shareholder loan). We can call some/all of that loan in to clear the creditor. If we'd distributed 100% of the funds on day one it would be far more awkward. We'd still have some recourse against the director/shareholder, as the situation would only arise if they'd told us porky pies at the outset (irrespective of whether deliberately lying or just forgetting), but it would be a lot more painful to deal with, potentially making the initial distribution invalid, or turning the MVL into a CVL. Any creditor wouldn't be happy with us if we distributed 100% of funds before the advertised period for creditors to object had passed. Also often the two distributions will straddle a personal tax year, so quite regularly there's over a grand to be saved in tax by separating them (10% on ~£12k extra annual exemption).

        We're hoping to get a hefty discount on bond prices at our next renewal. Until then, they'll stay as they are (easy money for the insurer!).

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