Restructuring London Company using Members Voluntary Liquidations
Working Collaboratively with Accountants, as Liquidator, on Members Voluntary Liquidations
As Licensed Insolvency Practitioners, we are often invited by accountants to work as part of a team on complex projects, supplying the insolvency expertise, including members voluntary liquidations. This case study looks at one such project, where one of our Insolvency Practitioners, Stephen Evans, was appointed the Liquidator on a major restructuring project involving a solvent liquidation, following a recommendation by a London based firm of accountants.
This case study focuses on our role within this solvent liquidation, which resulted in a very happy client.
Background to this Solvent Liquidation Case
A quick summary sets the scene.
- The company involved was JE Strutt (London), originally a roofing contractor, and a successful family business, majority owned by the Strutt family, with the Nelson family owning the remainder. Over time, the profits were used to acquire residential properties, and by 2000 that was the sole remaining activity of the company.
- In order to protect against the risk of claims that are common in property and construction, a holding company was set up in 1998, called JE Strutt (London) and a new company, Grantock, became subsidiaries of Arcachon, specialising in property acquisition.
- The Strutt family was the majority shareholder of Arcachon, and the Strutts and the Nelsons maintained their shareholdings in JE Strutt (London).
- It became clear to the two families that it made sense to unwind their businesses, and the accountant was instructed to recommend a procedure that would facilitate a separation.
A Demerger Under Section 110 of the Insolvency Act, 1986 was Recommended
The demerger allowed the Strutt family to retain Arcachon and JE Strutt, whilst the Nelsons took Grantock. The companies were solvent, so this was effectively a members voluntary liquidation which is where we came in as the liquidator, following a recommendation from the accountant.
We have worked with this particular accountant on many insolvency projects over the years, including other Section 110 solvent liquidations. Section 110 of the Insolvency Act 1986 allows the liquidator in a members’ voluntary liquidation to transfer a company’s assets to another company or companies in exchange for shares in the transferee company. This provision is commonly used to demerge or partition solvent businesses in a tax efficient manner.
Whilst the accountant worked on designing and implementing the overall demerger mechanism and provided specific advice to minimise stamp duty and stamp duty land tax, our role as liquidator comprised:
- Being instrumental in providing the detail needed in order for the agreement to be drafted
- Being the sounding board for all parties: Client, Accountants and Lawyers, which ensured that the agreement was Insolvency Act compliant,
- Signing off all the assets transferred (in this case a group of properties).
The Client and the Referring Accountant were Happy with the Outcome
John Strutt, director of JE Strutt pointed out that the accountant’s design of the demerger, deep understanding of tax legislation and smooth management of the overall process to a successful conclusion, allowed them to get on with running their company without interruption.
At the same time, the accountant commented on our work:
“We have worked with Antony Batty & Company on many projects, in particular with Stephen Evans as Liquidator. This was a complex restructuring of a family business, and we had no hesitation in recommending Stephen as Liquidator for his experience and detailed knowledge of S110 solvent liquidations, which helped deliver a successful outcome for the client.”
Contact us for Help and Advice on Members Voluntary Liquidations
We are grateful for the recommendation from the accountant, and delighted to have played our part in this case. Click here for some of our other MVL testimonials.
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If you as an accountant (on behalf of a client), or business owner, need the expertise of an experienced insolvency practitioner in the matter of members voluntary liquidations (or any other insolvency procedure), please contact us or call us on 0208 088 0633 for a FREE initial discussion. With offices in Central London, Brentwood, Salisbury and The Cotswolds we are well placed to cover businesses in the South, the Midlands and beyond.