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A distribution in specie is a means of distributing the assets of a company in their physical form as opposed to turning them into cash first.

It is common practice to use Distributions In Specie in a Members Voluntary Liquidation (MVL) as a means of distribution of the assets to the shareholders. This is a procedure authorised to be undertaken by a Liquidator under the provision of the Insolvency Act 1986.

What Is A Members Voluntary Liquidation?

A Members Voluntary Liquidation is a solvent liquidation and one of the ways to liquidate your company when the creditors can anticipate and ought to obtain 100 pence in the £. An MVL can be undertaken entirely online.

An MVL is a procedure that is not strictly an insolvency procedure because the company is solvent and the creditors will be paid in full. It is a procedure that enables a business’ trade to be concluded and for a distribution to be provided to the shareholders or otherwise known as the members. It has to be undertaken by a Licensed Insolvency Practitioner.

Overdrawn Director’s Loan Account Distributed In Specie

What Is An Overdrawn Director’s Loan Account?

An Overdrawn Director’s Loan Account is money that is owed by a Director to the company. It is in effect no different to being overdrawn at a bank but instead of owing the bank money, the Director owes the company.

Overdrawn Loan Account Can Be Distributed In Specie By A Liquidator

It is therefore an asset of the company that can be distributed to the shareholders in a Members Voluntary Liquidation, just like with any other asset available.

This is a particularly common procedure to use when the Director of a company is also its main shareholder. It enables the Director in effect not need to repay the overdrawn director’s loan account back to the company.

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