The ICAEW monitors recently raised with The Insolvency Service the question whether liquidators in MVLs that continue for more than 12 months should be reporting to creditors. The answer provided in Alison Timperley's recent blog post is that the liquidator should send progress reports to any creditors who have not been paid in full at the time the obligation to send a progress report arises. The good thing is that in practice not many MVLs extend beyond 12 months, and in those that do it tends to be because the corporation tax position has not been resolved, so HMRC will usually be the only unpaid creditor.
For those of you that like to know the legislative detail behind such matters, the requirement to issue an annual progress report comes from section 92A, which says that a copy of the report must be sent to the members and “such other persons as may be prescribed”. Rule 4.49C prescribes the content of the progress report by linking it to rule 4.49B. Rule 4.49B provides the detailed rules as regards timing of reports and states that “the prescribed person (in addition to members and creditors) to whom the liquidator must send a copy of a progress report is the registrar of companies.” This appears to mean that creditors and members should have the report in any event. The rule applies to both MVLs and CVLs with rule 4.1(1)(aa) indicating that for MVLs it applies to MVLs “except so far as it is provided (expressly or by necessary implication) that (it) does not apply.”
If creditors have all been paid then you do not have to send a report because it would be disapplied under rule 4.1(1)(aa). However, if creditors are not paid within 12 months as envisaged in the legislation, then they still have a financial interest in the case and so should receive an update on progress.
