Corporate Simplification

Over the past 20 years, our experienced professionals, qualified accountants, restructuring tax specialists and licensed insolvency practitioners have provided innovative closure and simplification solutions for limited companies, partnerships, PLCs, investment trusts and corporate groups of all sizes, and across multiple sectors/industries.

During that time, we have helped to successfully prepare for and implement the elimination of thousands of legal entities, both on a standalone basis or working alongside tax, legal and accounting specialists as part of broader group simplification/Legal Entity Rationalisation (LER) projects.

Most commonly, elimination is achieved by way of Members’ Voluntary Liquidation (MVL), a process that requires a licensed insolvency practitioner in the UK, but careful consideration of all available options is essential to preserve value and alleviate personal and corporate risk.

We are committed to helping you find the right path.

Drivers

Most voluntary eliminations in the UK fall into one of two categories:

1) Standalone eliminations in specific scenarios, such as:

• The business has been sold/transferred or a company has otherwise served its purpose
• The owners are retiring and wish to extract capital
• A multinational group is exiting the UK
• An Investment Trust has reached its redemption date
• The stakeholders want to demerge assets or return capital in a tax-efficient way
• There are long-tail contingent liabilities

2) Multiple eliminations as part of broader group simplification/Legal Entity Rationalisation (LER) projects, triggered by:

• Multiple redundant entities/obsolete SPVs
• Cost reduction initiatives
• Excessive management time spent on compliance
• Director concerns over personal risk and fading corporate memory
• Regulatory/stakeholder pressure to simplify/increase transparency
• Tax inefficiency
• Marketability concerns/M&A activity

Benefits

The benefits of eliminating entities will vary depending on the reasons for eliminating them in the first place and, importantly, the method of elimination chosen, but some of the key outcomes can include:

• Personal obligations of Directors being brought to an end and personal risk being alleviated
• Dividend blocks being removed and capital being returned to shareholders in a tax efficient manner
• Known/unknown actual and contingent creditor claims being crystallised/quantified
• Structural complexities being removed and tangible/intangible costs being reduced
• Group management time being freed up to deal with business-critical matters
• Greater transparency for key internal/external stakeholders

Regardless of the size/nature of the project and desired outcome, our experienced team can assist with identifying/categorising elimination targets, due diligence, elimination planning (including tax considerations) and overcoming perceived elimination barriers, as well as implementing your preferred elimination route.

Options

There are three options for voluntarily eliminating entities in the UK (unlike in some jurisdictions, no corporate merger process is available):

• Members’ Voluntary Liquidation (MVL)
• Creditors’ Voluntary Liquidation (CVL)
• Voluntary Strike Off Application (VSO)

There is no single answer or definitive criteria to determine the most appropriate elimination route, which should be considered on an entity-by-entity basis taking into account a number of factors, which can include:

• When/how the entity ceased to trade
• The nature/value of any assets
• The nature/value of any actual/contingent liabilities
• Any tax or other deadlines driving the process
• The desired tax treatment of any capital returns
• The key stakeholders’ attitude to risk

We have many years’ experience assisting with due diligence, considering key questions and, importantly, helping make an informed decision. We can also provide licensed insolvency practitioners to act as liquidators if required, a statutory requirement in the UK.