voluntary winding up

UK term for liquidation procedure initiated by the management of a firm following a special or extraordinary resolution to the effect. Two basic types of voluntary winding up procedures are: (1) Members voluntary winding up: under which the directors make a statutory declaration of the firm's solvency within the five weeks preceding the adoption of resolution. This declaration must state that, upon an inquiry into the firm's financial affairs, directors are of the opinion that the firm can pay off its debts in full within a specified period not exceeding 12 months after commencement of winding up. A statement of the firm's assets and liabilities (as on the latest practicable date) must also accompany the declaration and, thereafter, the shareholders (members) of the firm must appoint one or more liquidators in a general meeting. (2) Creditor's voluntary winding up: under which no declaration of the firm's solvency is made but the firm must hold a meeting of creditors and submit to them the statement of its assets and liabilities as on the latest practicable date. The right to appoint liquidator(s) accrues to the creditors. In both types, the powers of directors cease upon the appointment of the liquidator(s). Also called voluntary liquidation.