Voluntary liquidation
September 1997
Note – Transitional provisions
The Insolvency (Amendment) Rules 2010 (IAR) came into force on 6 April 2010 and have had some effect on voluntary liquidations in cases where the company enters into liquidation upon the passing of a resolution to wind up on or after 6 April 2010. The relevant paragraphs have been updated to reflect the changes and information is provided to show when they apply. Further details regarding the application of the transitional provisions can be found at Annex A.
48.1 Vacation of office following conclusion of members’ voluntary liquidation (MVL)
(Amended December 2010)
In a members' voluntary liquidation (MVL), the liquidator must call a general meeting of the company when he/she has fully wound up the affairs of the company and present to it an account of the conduct of the liquidation and explain how the company's property has been disposed of. The meeting must be called by advertisement in the London Gazette at least one month before the meeting, specifying the time, place and object of the meeting and the date by which proxies must be lodged to be entitled to vote. For post 6 April 2010 resolution cases, the liquidator may in addition advertise the meeting in such other manner as he/she sees fit and the Rules specify the contents to be included. The Rules as amended by the IAR now also detail the information to be contained in the liquidator’s report to the meeting.
A meeting is competent to act if a quorum is present which in the case of a meeting of contributories is at least 2 contributories entitled to vote, or all the contributories if their number does not exceed 2. If a quorum is not present at the meeting, the liquidator should make a return that the meeting was duly summoned and no quorum was present which is deemed to comply with the provisions of section 94(3). Within one week of the meeting, the liquidator must file a copy of the account with the Registrar of Companies together with a return of holding the meeting or (if applicable) the lack of quorum at the meeting. The liquidator shall vacate office after complying with section 94 (3). The company is dissolved automatically three months after the return is registered unless the court makes an order deferring the date. If the liquidator wishes the date to be different, it is essential that an application is made under section 201. A request to the Registrar of Companies has no legal effect and will not be complied with in the absence of an order under section 201. If the liquidator fails to call a general meeting of the company he/she is liable to a fine.
Notes: [s94] [r 4.126A ][r12.4A (r12A.21 for post 6 April 2010 resolution cases)][s94(3)][s171(6)][s201(2) and (3)][s94(6)][s430,Sch10]
48.2 Vacation of office following conclusion of creditors’ voluntary liquidation (CVL)
(Amended December 2010)
In a creditors' voluntary liquidation (CVL), when the company's affairs have been fully wound up, the liquidator must call a general meeting of the company and a meeting of creditors and lay before them an account of the conduct of, and disposal of the assets in, the liquidation. The meetings are called by advertisement in the London Gazette at least one month before the meeting specifying the time, place and object of the meeting and the date by which proxies must be lodged to be entitled to vote. For post 6 April 2010 resolution cases, the liquidator may in addition advertise the meeting in such other manner as he/she sees fit and the Rules specify the contents to be included.
The liquidator shall give at least 28 days notice of the final meeting, by sending a notice individually to all creditors who are known to him/her. In post 6 April 2010 resolution cases the liquidator must, at least 8 weeks before holding the final meeting, send to all known creditors a draft of the report that he/she intends to lay before the final meeting. The liquidator must also advise creditors of their right to request further information or to challenge his/her remuneration and expenses.
For post 6 April 2010 resolution cases, the Rules specify all the information that must be contained in the liquidator’s report to the meeting which includes a receipts and payments account and details of the liquidator’s remuneration and expenses. At the meeting the creditors may question the liquidator on any matters regarding the account. The creditors may resolve against the release of the liquidator, in which case he/she must obtain his release from the Secretary of State.
A meeting of creditors and contributories is competent to act if a quorum is present and a quorum in the case of a creditors' meeting is at least one creditor entitled to vote, and in the case of a meeting of contributories, at least 2 contributories so entitled, or all the contributories, if their number does not exceed 2. If there is no quorum at either of the meetings, the liquidator should make a return that the meetings were duly summoned and that no quorum was present which is deemed to comply with the return required by section 106(3). Within one week after the date of the meetings the liquidator shall send to the Registrar of Companies a copy of the account and a return of the holding of the meetings and their date(s). The liquidator shall vacate office as soon as he/she has complied with section 106(3). If the liquidator fails to make returns or fails to call a general meeting of the company or a meeting of creditors he/she is liable to a fine.
Notes: [s106][r4.126 as amended by the Insolvency (Amendment) Rules 2010][r4.49D] [s173(2), r4.122] [r12.4A (r12A.21 for post 6 April 2010 resolution cases][s106(3)][s106(4)&(6)][s430,Sch10]
48.3 Removal of liquidator (MVL)
The liquidator may be removed from office only by an order of the court or by a general meeting of the company summoned specially for that purpose. An application may be made to the court for the removal of the liquidator or for an order directing the liquidator to summon a general meeting of the company for the purpose of removing him/her. The court may dismiss the application if it feels there is insufficient cause but the applicant must have the opportunity to attend court for a hearing. If the application is not dismissed, the court shall fix a hearing date. The court may require the applicant make a deposit or give security for the costs to be incurred by the liquidator. The costs of the application are not payable out of the assets of the company unless the court orders otherwise. The applicant should send to the liquidator at least 14 days before the hearing a notice stating the venue, a copy of the application and any evidence which he/she intends to produce. If it is successful, the court will give the liquidator two copies of the removal order, one of which he/she should forward to the Registrar of Companies together with a notice of ceasing to act. If the liquidator was appointed by the court under section 108, a general meeting shall be summoned for the purpose of replacing him/her only if he/she thinks fit, or the court directs or the meeting is requested by members representing not less than one half of the total voting rights of all the members.
Notes: [s171(2), r4.143 as amended by the Insolvency (Amendment) Rules 2010][r4.143(5)][s171(3)]
48.4 Resignation of liquidator(MVL)
The liquidator in a MVL may resign on the grounds of ill health, cessation of practice, conflict of interest or change of personal circumstances which would make his/her continuation as liquidator impossible or impracticable. In such circumstances, the liquidator must call a general meeting of the company to receive his/her resignation and the notice summoning the meeting must indicate the purpose of the meeting and include an account of the liquidator's administration. After the meeting the liquidator will be given the notice required by section 171(5) which he/she should forward to the Registrar of Companies. If there is no quorum present at the meeting, the meeting is deemed to have been held.
Notes: [s171(5) & r4.142(3)][r4.142][r4.142(5)][r4.142(4A)]
48.5 Removal of liquidator (CVL)
The creditors alone have the power to, remove the liquidator in a creditors’ voluntary winding up even where he/she was originally appointed by the members, although the liquidator may also be removed by the court. The liquidator in a CVL must summon a meeting for his/her removal if it is requested by one quarter in value of the creditors, excluding those connected with the company. Where the creditors resolve that the liquidator be removed, the chairman of the creditors' meeting shall, if at the meeting another liquidator is not appointed, send a certificate of the liquidator's removal to the Registrar of Companies or where another liquidator is appointed, deliver the certificate to the new liquidator who shall send it to the Registrar. A creditor may apply to the court for the removal of the liquidator or for an order directing the liquidator to summon a general meeting for the purpose of removing him/her. The court may, on the application of any creditor, give directions regarding the summoning and conduct of such a meeting. The court may dismiss the application if it considers that insufficient cause has been shown but the applicant must first have the opportunity to attend at court for a hearing. The court may require the applicant to make a deposit or give security for the costs to be incurred by the liquidator on the application, since these are not payable from the assets of the company unless the court so orders. At least 14 days before the hearing the applicant must send a notice to the liquidator stating the venue together with a copy of the application and any evidence which he/she intends to produce. If the application is successful the court will give the liquidator two copies of the removal order, one of which should be forwarded to the Registrar of Companies together with a notice of ceasing to act. If the liquidator was appointed under section 108, a general meeting shall be summoned for the purpose of replacing him/her only if he/she thinks fit, or the court directs or the meeting is requested by not less than one half, in value of the company's creditors.
Notes: [s171(2)(b),r4.114-CVL][r4.117][r4.120-CVL as amended by the Insolvency (Amendment) Rules 2010, Form 4.39 as amended by the Insolvency (Amendment) Rules 2010] [r4.115][s171(3)]
48.6 Resignation of liquidator (CVL)
(Amended December 2010)
Pre 6 April 2010 resolution cases:
The circumstances when the liquidator in a CVL may resign are the same as stated in paragraph 48.4 above. A general meeting of creditors must be summoned and the notice must indicate that the purpose of the meeting is to receive the liquidator's resignation. The notice should be accompanied by an account of the liquidator's administration, including a summary of his/her receipts and payments and a statement that he/she has reconciled his/her account with the account held by the Secretary of State. If there is no quorum present at the meeting, the meeting is deemed to have been held and a resolution deemed to have been passed that the liquidator's resignation be accepted and the creditors are deemed not to have resolved against the liquidator having his/her release.
Notes: [r4.108][r4.108(6)]
Post 6 April 2010 resolution cases:
When the liquidator summons a general meeting of creditors for the purpose of receiving his/her resignation, at least 28 days notice of the meeting must be given to the creditors by the liquidator. The notice to creditors must indicate that purpose of the meeting and be accompanied by an account of the liquidator’s administration of the winding up, including:
i. commencing with the later of, the date of the liquidator’s appointment or the day after the end date of the last progress report; and
ii. ending with the date of the meeting.
If there is no quorum present at the meeting, the meeting is deemed to have been held and a resolution deemed to have been passed that the liquidator's resignation be accepted and the creditors are deemed not to have resolved against the liquidator having his/her release. The exception to this rule is where an application made to the court under rule 4.131 (creditor’s claim that the liquidator’s remuneration is excessive) has not been disposed of (see paragraph 48.6A).
Notes: [r4.108 as amended by the Insolvency (Amendment) Rules 2010]
All Cases:
The creditors may refuse to accept his/her resignation, whereupon the liquidator may apply to the court for permission to resign. Where a vacancy occurs in the office of liquidator, a meeting of creditors may be convened by any creditor or, if there was more than one liquidator, by the continuing liquidator to fill the vacancy. The court also has the power to appoint a liquidator where there is no liquidator acting. Once a liquidator has been appointed by the court any replacement liquidator must also be appointed by the court.
r4.111,Form 4.34 as amended by the Insolvency (Amendment) Rules 2010] [s104, r4.101A-CVL][s108][s104]
48.6A Resignation of liquidator – claim for excessive remuneration pending (CVL)
(December 2010)
Rule 4.108A was introduced by the Insolvency (Amendment) Rules 2010 (IAR) and applies to post 6 April 2010 resolution cases. The rule deals with the position where at the date of a creditors’ meeting summoned to receive the liquidator’s resignation, an application under rule 4.131 (to challenge the liquidator’s remuneration as excessive) has not been heard by the court and disposed of. If at the meeting the liquidator’s resignation is accepted, the meeting must be adjourned to a day not less than 14 days after the day on which the application under rule 4.131 has been disposed of, and creditors must be given at least 14 days notice of the adjourned meeting by the liquidator.
At the adjourned meeting a revised version of the liquidator’s account which accompanied the original notice of the meeting must be presented, showing any changes required as a result of the rule 4.131 application, and a resolution must be put for the release of the liquidator. If there is no quorum present at the adjourned meeting, the meeting is deemed to have been held and the creditors are deemed to have resolved that the liquidator be released. The chairman of the meeting must then send a certificate, showing that the creditors have accepted the liquidator’s resignation, and a copy of the revised account to the Registrar of Companies.
If at the meeting the liquidator’s resignation is not accepted, the liquidator must not summon any further meeting until the application under rule 4.131 has been disposed of.
Notes: [r4.108A] [r4.131]
48.7 Death of liquidator (MVL & CVL)
Where the voluntary liquidator in a MVL has died, it is the duty of his/her personal representatives to give notice of the fact and the date of his/her death to the company's directors and the Registrar of Companies. Additionally, any person may give notice of the death of the liquidator if he/she delivers with the notice a copy of the relevant death certificate. A general meeting of the company may be convened by any contributory or, if there were more than one liquidator, by the continuing liquidator(s), for the purpose of filling the vacancy, subject to any arrangement with the creditors. In a CVL, if the liquidator dies, it is the duty of his/her personal representative to give notice of the fact to the Registrar of Companies and to the liquidation committee, if any. If the deceased liquidator was a partner in, or an employee of, a firm, notice of the death may be given by a partner in the firm who is qualified to act as an insolvency practitioner or by any person, if he/she delivers with the notice a copy of the relevant death certificate. The creditors may fill the vacancy unless the liquidator was appointed by the court when an application to court is required. The court may also appoint a liquidator to fill any vacancy that has occurred and any such liquidator may only be removed by the court on cause shown under section 108(2).
Notes: [r4.145][s92][r4.133 as amended by the Insolvency (Amendment) Rules 2010][s104, r4.101A-CVL][s108(1)]
48.8 Loss of authorisation (MVL & CVL)
When the liquidator vacates office on ceasing to be authorised or qualified to act as an insolvency practitioner, he/she should give notice to the Registrar of Companies and the Secretary of State. He/she must apply to the Secretary of State for his/her release. In such circumstances, IP Section, London will liaise with the outgoing liquidator and /or his/her authorising body as to the appointment of a successor practitioner. If the official receiver encounters any difficulty in a case where the voluntary liquidator has vacated office due to his/her loss of authorisation, he/she should contact IP Section (see also chapter 55, Part 2 - Insolvency Practitioners).
Notes: [r4.135-CVL & r4.146][Form 4.45]
48.9 When release takes effect (MVL)
The release of the liquidator in a MVL takes effect as follows:
When the Secretary of State gives the liquidator his/her release, he/she shall certify it accordingly and send the certificate to the Registrar of Companies. A copy of the certificate shall also be sent to the former liquidator by the Secretary of State, whose release is effective from the date of the certificate.
If a winding-up order is made against the company, the liquidator vacates office (and is replaced by the official receiver) and he/she must apply to the Secretary of State (IPU Birmingham) for his/her release. The official receiver should arrange with the voluntary liquidator for the handing over of assets and collection of the company's records (see also paragraphs 56.92 and 56.93).
Notes: [s173(2)][s171(6)][r4.144][Form 4.41][s136(2),r4.147][r4.148]
48.10 When release takes effect (CVL)
(Amended December 2010)
The release of the liquidator in a CVL takes effect as follows:
When the Secretary of State gives the liquidator his/her release, he/she shall certify it accordingly and send the certificate to the Registrar of Companies. A copy of the certificate shall also be sent to the former liquidator by the Secretary of State, whose release is effective from the date of the certificate.
If a winding-up order is made against the company, the liquidator vacates office (and is replaced by the Official Receiver) and he must apply to the Secretary of State (IPU Birmingham) for his/her release. The official receiver should arrange with the voluntary liquidator for the handing over of assets and collection of the company's records (see also paragraphs 56.92 and 56.93).
Notes: [s171(6),r4.126-CVL(3)][r4.122-CVL(3)][r4.122-CVL(2)][r4.122(3)][Form 4.41] [r4.122(1) (as amended by the Insolvency (Amendment) Rules 2010 for post 6 April 2010 resolution cases)][r4.111,Form 4.34 as amended by the Insolvency (Amendment) Rules 2010][r4.134(3)][r4.144(4)(5)][s136(3),r4.136][r4.138]
48.11 Liquidator’s duties on vacating office
When the liquidator ceases to be in office due to removal, resignation or loss of qualification, he/she should deliver up to the person succeeding him/her as liquidator the assets, after deduction of any expenses properly incurred. He/she should also deliver up the liquidation records, including correspondence and proofs of debt and the company's books, papers and records.
Notes: [r4.138 & r4.148][R13(2)IR 1994]
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