members' voluntary liquidation

Liquidation of a solvent firm by adoption of a resolution for voluntary winding up of the business by its shareholders who also choose and appoint the liquidator. Since it is not an insolvency procedure, it requires a statutory declaration of solvency by the firm's board of directors (it is commonly a criminal offense to make this declaration without sound grounds). Although the involvement of a court is not required, a qualified liquidator must be appointed after the resolution. If it is discovered that the firm's assets will not be sufficient to cover its debts, the unsecured creditors can take charge of the liquidation process which is then termed a compulsory liquidation. Also called members' voluntary winding up, or just voluntary winding up.