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| Solvent Liquidation |
| Shareholders can
put a company into liquidation when it is solvent, i.e. is
able to pay all creditors’
claims in full within 12 months. This will bring a company to
the end of its life when it is no longer required. The process
is often used as a part of restructuring of a group of companies.
In any event it is a safer and more efficient way of dissolving
a company rather than simply having it struck off from the company’s
register at Comporate Affairs Commission as it draws a line
under all liabilities without any recourse to the directors
and shareholders should further liabilities arise at a later
date. |
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| A
solvent liquidation, or members' voluntary liquidation (“MVL”),
enables the shareholders to put a solvent company into liquidation. |
| MVL can be used: |
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to secure an orderly winding up of
a company |
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by shareholders wishing to unlock
their capital |
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to close down a subsidiary, within
a group of companies, which has outlived it’s usefulness |
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| The MVL is under the direction
of the shareholders who appoint a liquidator. |
| MVL
procedure requires a Statutory Declaration of Solvency which
states the directors have conducted
a full enquiry of the company affairs and have the opinion
it is able to repay it’s debts, with interest, within
a 12 month period. |
| The liquidator is appointed
at an extraordinary general meeting of the company, approved
shareholders votes. The liquidator realises the company assets,
settles any creditor claims and distributes the remaining assets
to shareholders. |
| Tamuno
George & Co partner, who are licensed insolvency practitioners,
are able to accept appointments as liquidators. |
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| Insolvent Liquidations and Receivership |
| If
a company is insolvent, the directors have a legal duty to
do everything possible to protect
the interests of the creditors. Ultimately, this may mean
calling a meeting of shareholders to put the company into liquidation
and appoint a liquidator, and a meeting of creditors to ratify
the appointment of a liquidator. This procedure is known
as
a Creditors Voluntary Liquidation (“CVL”). |
| If creditors are owed a sum
of money and it can be proven that the company is unable to
pay its debts, they may petition the Court for the company to
be placed in liquidation, i.e. for a winding up order to be
made by the Court. When the company is in compulsory liquidation,
i.e. is wound up by the Court. Our Receiver, a member of Insolvency
Practitioners Association of NIgeria, can be appointed as liquidator
if the creditors so wish. |
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