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What Is The Statement Of Affairs In Voluntary Liquidation?

The Statement of Affairs in a Creditors Voluntary Liquidation or a Members Voluntary Liquidation is an up to date financial position of a company.

A Statement of Affairs is like an up to date balance sheet prepared on a break up basis but there is more information required.

What Is The Statement Of Affairs In A Voluntary Liquidation?

What Information Is Included In The Statement Of Affairs In A Voluntary Liquidation?

The information that needs to be included within the Statement of Affairs is a document that typically sets out the following information as set out in Section 99 of the Insolvency Act 1986 for a Creditors Voluntary Liquidation:

  • assets (includes both physical and non-physical assets eg goodwill, book debts, databases, computer source code, intellectual property etc.)
  • liabilities
  • list of creditors with names and addresses and the amount of their debt
  • details of secured creditors and show which assets their debt holds security over

From the information in the statement of affairs subject to the costs and expenses of the Liquidation which are not included, the creditors should have an idea of what will be recovered as a consequence of the Liquidation. The break up and book value of the assets should be information provided to enable the same.

In the case of a Members Voluntary Liquidation, the requirement is confined to contain a statement of the company’s assets and liabilities.

Additional Requirements Of The Statement Of Affairs

Under Rule 6.4 of the Insolvency (England And Wales) Rules 2016 there are additional requirements to the Statement of Affairs.

This information is typically supplied in the document and its supplemental schedules relating to details of the:

  • shareholders
  • further particulars of each creditor
  • employees
  • consumers

However, the Liquidator under Rule 6.2(4) of the Insolvency (England and Wales) Rules 2016 must not deliver to Companies House the schedules of creditors of employees and or consumer creditors.

Is it An Estimate?

A Statement of Affairs is not a document that is provided in round sums so it is not intended to be full of estimates.

Necessarily, the estimated to realise values of the assets disclosed in the Statement of Affairs will be estimated. However, those values should be backed up by some reliable valuations that are capable of being justified. As such it makes sense for some of the more material assets for the same to be professionally valued.

The requirement is that the numbers it contains will be accurate because it is supported by a Statement of Truth in a Creditors Voluntary Liquidation. In the case of a Members Voluntary Liquidation, it is in effect supported by a a sworn Statutory Declaration of Solvency.

Penalty For Failing To Prepare A Statement Of Affairs In A Voluntary Liquidation

In the case of a Creditors Voluntary Liquidation, the penalty for a Director who fails to prepare a Statement of Affairs is potentially serious. It is an offence and a Director is liable to a fine.

Employee Claims In The Statement Of Affairs

It is the duty of the Directors to enable all employees of a company to claim and have regard to the following points:

  • Liquidation gives every creditor the right to claim in the Liquidation.
  • All employees have the right to claim even if they are no longer employed.
  • Even if an employee has not claimed for any aspect of their employment (eg. redundancy, arrears of pay, notice, expenses, pension, etc) does not mean they cannot claim.
  • The liability of the company to an employee rests on what is in the employment contract (or arising from the employment). If in doubt provision needs to be made for such liabilities in the Statement of Affairs.
  • If a Director is aware of any employee claims they MUST make provision for them in the Statement of Affairs.

Frequently asked questions

What information is required for the Statement of Affairs?

Assets

List of Company Assets
Current valuation

Details of Company Bank Account(s)

  • Account Number(s) and Sort Code(s)
  • Address and telephone number(s) of Bank
  • Exact amount in each account

Directors

  • Full names
  • Address
  • Any loans to the company: Were the loans to be repaid (i.e. as a debt owing from the company) or was it financed through the issue of new shares at a premium (i.e. as equity being released in the company)?

Shareholders

  • Full names
  • Address
  • Break down of shares held i.e. Ordinary shares and share premium
  • Loans to the company: Were they to be repaid (i.e. as a debt owing from the company) or was it financed through the issue of new shares at a premium (i.e. as equity being released in the company)?

Creditors

  • Full names of all creditors (including Government departments if any)
  • Addresses
  • Full amount owed to them
  • Any secured creditors (i.e. Bank loans, mortgages)
  • References used by Creditors

Debtors

  • Full names of all debtors (including Government departments if any)
  • Addresses
  • Full amounts owed to the company
  • References used by Debtors

Employees of the company

  • Names of all employees at date of liquidation
  • Age
  • Date of Birth
  • Annual Salary
  • Notice Period
  • Number of days holiday per year
  • Number of days taken
  • Start of holiday year
  • Any pension contributions
  • Date employees last paid
  • Date made redundant

Landlord

Details of Landlord and full amount owing to them

Pension

  • Full Particulars of all company pension schemes, including;
  • Details of Scheme Trustee(s)
  • Membership
  • Policy number
  • Scheme provider
  • Nature of Scheme; defined benefit or money purchase

 Security

  • Full Particulars of any security granted by the company by way of fixed and or floating charge

Transactions

  • Details of any transactions between the Company, any of its subsidiaries, or any other company in which it has or had an interest and any one or more of the directors or associate(s) of them within the year leading up to the winding up resolution.

Who prepares the Statement of Affairs?

Typically the Insolvency Practitioner‘s firm or a professional adviser instructed by the Directors will assist the Directors in the preparation of the Statement of Affairs.

This assistance will be provided usually after obtaining information from you and your accountants. It is however the Directors’ responsibility to assemble and produce the Statement of Affairs.

What happens if creditors claim for more monies than detailed on the Statement of Affairs?

The Insolvency Practitioner will adjudicate the claims of creditors, so if people claim for more money than what is showing on the Statement of Affairs, it is not a problem. The important aspect of this is that the information you put in the Statement of Affairs should be accurate to the best of your knowledge and belief.

GET IN TOUCH FOR HELP

For a free no obligation chat about any of the matters detailed above, please do get in touch for help. An expert will call you back or if you prefer exchange emails.

We can explore your situation and consider the best way to help you and your business needs. You can call us 020 3925 3613 or fill in the form below and will get back to you quickly. We Know Insolvency Inside Out.

Author: Elliot Green
Last Updated: May 20, 2024

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Disclaimer: Statement Of Affairs In A Voluntary Liquidation

This page is not legal advice and is not to be relied upon as such. This article Statement Of Affairs In A Voluntary Liquidation is provided for information purposes only. You should take independent advice on the facts of your case. No liability is accepted for reliance upon this post.

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