Checking this is how Liquidation works

[TimeToQuit]

Hi All,

About to kick off the formal process of Liquidating (MVL) our company, and I want to check that what I am being told is correct, above board, and how its normally done....

"The liquidator is required to collect the assets of the Company following their appointment. To avoid any unnecessary delays in writing to the Company’s bank, who would freeze the account and remit the closing balances to the liquidation estate (a process that can take months), we ask that the Company’s available cash at bank is transferred to us, the proposed liquidators, prior to liquidation. We would then hold the funds pending the date of liquidation which would put us in a good place to distribute the money to the shareholders shortly after liquidation. I will send across details of our bank account details closer to the time and when required."

Feeling slightly nervous about the prospect of transferring a massive amount of cash to a company I have never met (its all been done by email and video chat) into their company account.

Company is Begbies Traynor

Obvious questions are:

1) Is this the standard way of doing a liquidation (if we end up with the cash anyway, why doesn't it just get transferred to us)
2) What happens if we transfer the cash and then their company goes under?
3) Anybody else used this company, and done the transfer this way?

Thanks all

[northernladuk]

Why not use MVLOnline and be at peace that the people you are sending it to can be trusted?

[Maslins]

1) lots of different ways of getting to the same end result (funds from company account to your personal account). I wouldn't say it's "the standard way of doing a liquidation", but I can sympathise with their comments that leaving funds in the company bank account and them writing to your company's bank post appointment can take months to get a successful outcome, highly dependent on which bank your company's account is with. Having said that it is of course worth you're comfortable with the alleged liquidator, that they're not some scammer...but if this is indeed Begbies Traynor, you're fine.
2) Begbies Traynor are absolutely enormous, not some Johnny come lately company, so this is extremely unlikely. Even if it were to happen, I'd expect your funds would be clearly held separate to their own business funds.
3) I'd imagine so (like I say, they're huge), though I don't know anyone personally.

[courtg9000]

Begbies Traynor are a massive outfit. I don't think there is anything untoward.

[john@UKCA]

Hi All,

Obvious questions are:

1) Is this the standard way of doing a liquidation (if we end up with the cash anyway, why doesn't it just get transferred to us)

Go the other route if you are worried about it - you distribute funds just prior to placing into liquidation and then the Liquidator immediately declares a "Distribution in Specie" for your shareholder loan thus wiping out any liability you have to the company.

[Mr.Whippy]

I took that route, with MVLOnline. Account was frozen and they collected the funds and transferred the majority (90% or so) of it to me very quickly.

the remainder they held onto until they got HMRC clearance and they sent it immediately once they did.

No experience of Begbies Traynor, but they are legit...

as for MVLOnline, I couldn’t recommended them highly enough. Always very quick (<5 mins some times) to respond to emails and clearly explain everything in detail and also very proactive in contacting me when they said they would or when it was required. With a larger outfit, you may find they are a little slower to respond etc (only basing this on their size as in general the bigger an outfit, the slower they can be!)

[john@UKCA]

I took that route, with MVLOnline. Account was frozen and they collected the funds and transferred the majority (90% or so) of it to me very quickly.

the remainder they held onto until they got HMRC clearance and they sent it immediately once they did.

That's different to the Distribution in Specie route whereby you withdraw the funds prior to appointing Liquidator - becomes a non cash MVL which also reduces the Bonding Fee.

[Mr.Whippy]

That's different to the Distribution in Specie route whereby you withdraw the funds prior to appointing Liquidator - becomes a non cash MVL which also reduces the Bonding Fee.

Sure, I know how a distribution in specie works. I was in no rush and could wait for the money. It was more important to me to remove the risk, no matter how small, of the distribution being seen as personal income and not a capital gain and affect any BADR claim.

The MVL involved a significant sum and losing CGT & BADR on it would've incurred tens of thousands of additional CGT liability. So for the price of the bond & a bit longer waiting for the money I decided to take that route

[john@UKCA]

The MVL involved a significant sum and losing CGT & BADR on it would've incurred tens of thousands of additional CGT liability. So for the price of the bond & a bit longer waiting for the money I decided to take that route

Not sure there is any risk of losing BADR using the dividend in specie route following HMRC publication CTM61559.

https://www.gov.uk/hmrc-internal-man...anual/ctm61559

[Mr.Whippy]

Not sure there is any risk of losing BADR using the dividend in specie route following HMRC publication CTM61559.

https://www.gov.uk/hmrc-internal-man...anual/ctm61559

OK hadn't read that previously but I think I'd still have gone the same way as I did. For the sake of a few weeks waiting (on the bank, not the liquidators I hasten to add) it suited me.

I didn't realise you could withdraw the funds directly to yourself before appointing a liquidator though, so you learn something new every day