What is a Declaration of Solvency?

Example of Declaration of Solvency Letter for Members' Voluntary Liquidation

What does the letter say?

We (a) being (b) [all the] [the majority of the] directors of (c) do solemnly and sincerely declare that we have made a full enquiry into the affairs of this company, and that, having done so, we have formed the opinion that this company will be able to pay its debts in full together with interest at the official rate within a period of (d) months, from the commencement of the winding up.

What does this letter mean?

A Declaration of Solvency often precedes the process of a Members’ Voluntary Liquidation (MVL), when shareholders wish to liquidate a solvent company.

This document allows company director/s, to make statutory declaration that states that the company will be able to repay its debts (and interest) within a fixed period, not exceeding 12 months. Accompanying this declaration includes a statement of the company’s assets and liabilities.

This declaration is made before a solicitor/commissioner of oaths and subsequently filed at Companies House. There are significant repercussions if a false or negligible declaration is made and is highly advisable to liaise with an experienced insolvency professional during this process.

Find out more about Voluntary Liquidation Options for your limited company.