Voluntary winding up Definition

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GLOSSARY

What does Voluntary winding up mean?

The non-court based process by which a company's assets are realized for the benefit of its creditors.

A voluntary winding up does not involve court proceedings and is instead instigated by the company passing a resolution. Such a winding up is either a members' voluntary winding up if the directors swear a statutory declaration that the company is solvent, or a creditors' voluntary winding up if they do not. In the former the winding up is under the control of the members of the company and in the latter it is under the control of the company's creditors.

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Effect on proceedings against a company being wound up and after a winding-up order is made

This Practice Note sets out guidance as to what happens when proceedings have been commenced against a company and:•a winding-up petition is presented against the company, or•the company's members pass a resolution to wind it up through a creditors' voluntary liquidation (CVL)Any formal insolvency proceeding is a collective remedy. This means that all unsecured creditors rank equally. A judgment obtained in any proceedings against the company does not create any form of priority over other creditors in the same class. Nor is a judgment any form of security. It follows that the decision whether to continue proceedings against a company which is being wound up is primarily a commercial one rather than a legal one. There is frequently no commercial advantage in incurring further legal costs against an insolvent company. For further reading, see: Proof of debt—overview.It should also be borne in mind that any disposition of any company property after the presentation of a winding-up petition is void under section 127 of the Insolvency Act 1986 (IA 1986) unless:•it...

Role, powers, functions and duties of a liquidator

The role and functions of a liquidatorA liquidator must be a licensed insolvency practitioner and authorised by a recognised professional body or the Secretary of State.In basic terms, a liquidator’s function is to secure the assets of the company and ensure that they are realised and distributed to the company’s creditors and, if there is any surplus, to the company’s contributories. A liquidator must fulfil this function following the duties imposed and powers granted to them under the Insolvency Act 1986 (IA 1986) and the Insolvency (England and Wales) Rules 2016 (IR 2016), SI 2016/1024.Liquidators have a duty to act in the interests of creditors and contributories generally and as such must exercise a high standard of care and skill. They must always act impartially and independently.A liquidator acts as an agent on behalf of the company, although in a somewhat different way to a standard agent in that this agent directs the principal as well as acts for it. The liquidator does not stand in the shoes of the...

Discover our 6 Practice Notes on Voluntary winding up

Phantom share option agreement

Phantom share option agreement This AGREEMENT is made on [insert date of execution of the phantom share option agreement] Parties 1 [insert name of company whose shares are relevant to the phantom option] (registered number [insert registered number of company]) whose registered office is at [insert registered address of company] (the Company); and 2 [insert name of option holder] of [insert address of option holder] (the Option Holder) Background (A) The Company has agreed to grant to the Option Holder as at the date of this Agreement a Phantom Option on the terms set out in this Agreement. (B) The Phantom Option provides an entitlement to cash and not shares. 1 Definitions In this Agreement, except where the context otherwise requires, the words and expressions set out below will bear the following meanings, namely: Cash Payment • means the cash sum payable on the exercise of the Phantom Option, which shall be calculated in accordance with clause 6.2; Control • has the meaning given...

Unapproved share option agreement—standalone deed for employee

Unapproved share option agreement—standalone deed for employee This AGREEMENT is made on [insert date of execution of the share option agreement] Parties 1 [insert name of company whose shares are being granted under option] (registered number [insert registered number of company]) whose registered office is at [insert registered address of company] (the Company);[and] 2 [insert name of option holder] of [insert address of option holder] (the Option Holder) [and] 3 [[insert name of grantor (if different from company)] of [insert address of grantor] (the Grantor)] Background (A) [The Company has agreed to grant to the Option Holder as at the date of this Agreement an Option to acquire Shares on the terms set out in this Agreement. OR The Company and the Grantor intend that, as at the date of this Agreement, the Option Holder be granted an Option to acquire Shares on the terms set out in this Agreement.] (B) [The Company will satisfy the exercise of the Option by transferring or procuring the...

Dive into our 12 Precedents related to Voluntary winding up

FTT finds that director loan was not written off or released on liquidation (Quillan v HMRC)

Tax analysis: In Quillan, the First-tier Tax Tribunal (FTT) allowed the taxpayer’s appeal, finding that his director loan account balance was neither written off nor released for the purposes of section 415(1) of the Income Tax (Trading and Other Income) Act 2005 (ITTOIA 2005) on the liquidation of the company, contrary to HMRC’s guidance on this area in its Company Taxation Manual.

The practical implications of the Charitable Incorporated Organisations (Insolvency and Dissolution) (Amendment) Regulations 2020

Private Client analysis: Gemma Bell, partner at Penningtons Manches Cooper, discusses the practical implications of the Charitable Incorporated Organisations (Insolvency and Dissolution) (Amendment) Regulations 2020 (the 2020 Regulations) and what charitable incorporated organisations (CIOs) need to be aware of in relation to the amended regulations.

Read the latest 2 News articles on Voluntary winding up

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GLOSSARY