Approved Recovery FAQs
Table of Contents
How much does an MVL cost?
The cost of an MVL really depends on the company’s financial position and the assets and liabilities remaining which a Liquidator is required to deal with. There may also be additional matters which require closing out before the liquidation can be closed which will affect the cost.
Our Solvent Solutions service delivers a simple, quick and cost-effective procedure to all our MVL clients.
We offer three types of MVL, Simple, Standard and Advanced.
What are disbursements and how much are they?
Disbursements are expenses met by and reimbursed to an office holder in connection with an insolvency appointment. These fall into two categories.
Category 1 disbursements – These are payments to independent third parties where there is specific expenditure directly referable to an insolvency appointment. Category 1 disbursements can be drawn without prior approval, although an office holder should be prepared to disclose information about them in the same way as any other expenses.
Category 2 disbursements – These are expenses that are directly referable to the insolvency appointment but not to a payment to an independent third party. They may include shared or allocated costs that may be incurred by the office holder or their firm, and that can be allocated to the appointment on a proper and reasonable basis. Category 2 disbursements require approval in the same manner as an office holder’s remuneration. When seeking approval, an office holder should explain, for each category of cost, the basis on which the charge is being made.
Approved Recovery Limited’s MVL disbursements comprise of the following:
- Anti-money laundering searches (company and individuals)
- Statutory advertisements in the London Gazette (three adverts required)
- Specific insurance bond (subject to company’s asset value)
Details of our disbursements rates and specific insurance bond are shown on our MVL disbursements page.
Bond discounts are available for group companies and clients with little or no cash.
All disbursements are charged at cost plus VAT where applicable.
What is the process?
Pre Liquidation (Written Resolutions Procedure)
- Contact us by either email, phone or completing our website contact form.
- We send you a form detailing the information we require to review and complete the proposed MVL. Send this information to us.
- We provide a quote to complete the MVL. If acceptable, confirm and return the Electronic Identity. Consent forms.
- Next, we issue you with our letter of engagement, board minutes and Declaration of Solvency.
- Esign the board minutes and letter of engagement. Sign the Declaration of Solvency before a solicitor and email the document to us. Post the original.
- Close company bank account and transfer closing balance into Approved Recovery’s client account.
- We circulate proposed written resolutions including the shareholder indemnity to members for eSigning.
- Company is placed into liquidation once requisite votes received from members.
- Early capital distribution to members (shareholder indemnity required) – 2 business days.
- Agree and settle any outstanding liabilities – 5 business days.
- Filing and advertising statutory notices – 10 business days.
- Liquidator realises any remaining assets – Month 1.
- Liquidator invoices disbursements – Month 1.
- Director submits pre-liquidation tax returns to HMRC – Month 1.
- Liquidator obtains pre liquidation tax clearance from HMRC – Months 2-5.
- Liquidator invoices fees – Months 2-5.
- Where possible, Liquidator reclaims VAT – Months 2-5.
- Final capital distribution to members and draft final account circulated – Months 6-8.
- Final progress report filed with Companies House and circulated to shareholders – Months 6-8.
- Company dissolved two months later.
- Company books and records destroyed twelve months later.
The above timescales are estimated and subject to change. Timescales can vary due to delays in HMRC granting pre liquidation tax clearance.
We are committed to completing the MVL as quickly as possible.
Liquidation seems an odd word for bringing a solvent company’s affairs to an end?
Liquidation is the process of closing a business so that its assets can be sold to pay its debts and return surplus funds to shareholders.
There are two types of liquidation under UK law:
- Members’ Voluntary Liquidation (solvent)
- Creditors’ Voluntary Liquidation (insolvent)
Generally people assume a company to be insolvent when it is in liquidation. However, a company in liquidation can also be solvent.
My accountant has recommended another firm of Insolvency Practitioners but they are more expensive than Approved Recovery. Why the difference?
Approved Recovery is a small business servicing small companies nationwide. We only provide liquidation services to our clients.
We have invested heavily in information technology to ensure optimum efficiency and utilise a correspondence based procedure to keep costs down.
Our fixed fee pricing structure provides clients with an opportunity to reduce the cost of the MVL and maximise tax efficient returns to shareholders. This is achieved by clients tidying up their balance sheet and completing certain administrative tasks before they are placed into liquidation.
There are no hidden referral or introducer fees, just a clear and transparent fixed fee pricing structure.
Is the level of service provided any different?
At Approved Recovery we provide an enhanced service to all our clients and go beyond the statutory reporting requirements. We keep all key stakeholders updated regularly and provide them with monthly reports as the MVL progresses.
We provide the same level of service to all our MVL clients, irrespective of it being a Simple, Standard or Advanced MVL. Just exceptional client service combined with a fixed fee pricing structure.
How quickly can the company be placed into liquidation?
Upon receipt of all required information, it is possible to place a company into liquidation within a matter of days and assets distributed to shareholders within 24 to 48 hours of a Liquidator being appointed.
We use Electronic Signatures for pre-liquidation documents. This significantly improves document turnaround times.
What further work is required from the directors once the company is in Liquidation?
Ideally the company’s pre liquidation tax returns are submitted to HM Revenue & Customs before the company is placed into Liquidation. Where they are not, we agree with the directors that this work will be completed within one month of the company being placed into Liquidation.
What assurances can you give me regarding the security of company funds under your control?
We bank with Barclays Bank plc so rest assured that your funds are safe and secure. Our Insolvency Practitioners also have general and specific insurance bonds to protect your interests.
How quickly can shareholders receive payment and how much will they receive?
We make two capital distributions to shareholders, early and final.
In order to make an early capital distribution to shareholders, the company is required to transfer its cash balance into Approved Recovery’s client account and close the bank account before the company is placed into Liquidation.
Shareholders will also need to provide an indemnity.
Shareholders will receive the majority of funds within two business days of the company being placed into Liquidation. When calculating the early distribution to shareholders, Approved Recovery will provide for the costs of the liquidation and a small contingency fund. When the Liquidation is ready to be closed, shareholders will receive the remaining funds as a second and final distribution.
What is a shareholder indemnity?
A shareholder indemnity is a legal agreement between the company, its shareholders and a Liquidator. It protects the company and the Liquidator if a valid creditor claim is received and there are insufficient funds in the liquidation to settle it in full.
Ordinarily a Liquidator is required to complete a statutory process and is unable to make a capital distribution to shareholders until the following tasks have been completed:
– Advertised for creditor claims;
– Issued a notice of intended dividend to any creditors who have not lodged claims;
– Agreed, rejected and settled creditor claims in full;
– Obtained clearance from HM Revenue & Customs.
In our experience, it can take months before HM Revenue & Customs provides clearance. In most cases, shareholders are eager to receive funds and assets as quickly as possible. The shareholder indemnity allows a Liquidator to circumvent the statutory order of payments and make an early capital distribution.
If a valid creditor claim is received, a Liquidator would request that shareholders return funds to settle the claim in full.
If shareholders would prefer to wait until the statutory claims process is complete before receiving the capital distribution, then this is possible.
In either scenario, it is vital that both directors and shareholders understand the company’s financial position and potential liabilities that can come with a declaration of solvency and shareholder indemnity. Professional advice should always be sought in this regard.