Valid Reasons for a Members Voluntary Liquidation

members-voluntary-liquidationA Members Voluntary Liquidation or MVL is normal and happens to many businesses and industries. As its name suggests, the procedure is characterized by a deliberate decision to legally and formally close a solvent and viable entity; that is, the company has the full capacity to fulfill all obligations in full for at least within a twelve month period.

Of course, an MVL must be brought about for valid grounds and has to be done under applicable circumstances otherwise the court won’t allow for its use. With that said, below is a list of valid reasons behind a Members Voluntary Liquidation.

  • The desire of owners for a retirement…

Because the business and its owners are considered to be different juridical entities, corporate assets cannot be transferred to personal accounts unless liquidation is first achieved. This is why owners must first go through an MVL if they wish to retire, expire the company and enjoy the fruits of their long years of labor.

  • Pulling assets for reinvestment purposes…

For the same reason as stated above, should the owners wish to reinvest their resources in a different venture then a Members Voluntary Liquidation will have to be carried out. This is under the guise that all of the current entity’s resources shall be used for such investment.

  • The absence of a suitable heir or successor…

It also becomes a viable option to voluntarily close the business should there be no willing and qualified heir or successor to take over it. This is a particularly common scenario for businesses that are family owned and run. Instead of having the company be managed by the wrong hands, owners may opt to liquidate instead and maybe even put the money elsewhere.

  • Losing a vital member to the organization…

There are cases where a particular member’s importance to the organization is so great that their loss, death, retirement or resignation can lead to its downfall. During such circumstances and as a means to be risk averse, the procedure may be called for.

  • The completion of purpose…

There are cases where upon the completion of the corporate objective and/or the expiration of purpose, the company shall have to cease to exist. After all, what’s an organization for if it no longer has a goal? Since the entity is still solvent at this time, a Members Voluntary Liquidation is one very viable option.

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