Court highlights importance of valid members’ voluntary liquidation solvency declarations

A recent High Court decision has confirmed that the statutory declaration of solvency required for a members’ voluntary liquidation (MVL) must be completed correctly. If it’s defective, the company may be treated as entering a creditors’ voluntary liquidation (CVL), even when it’s plainly solvent and everyone involved intended the process to be an MVL.

In Cray & Ors, in the matter of Greenbank Technology Ltd [2026] EWHC 1466 (Ch), the company intended to enter an MVL as part of a wider group rationalisation. 

The company had transferred its business and assets, discharged its liabilities and was solvent. However, one director’s declaration of solvency hadn’t been made before a person authorised to administer a statutory declaration.

The court held that this wasn’t a minor procedural irregularity. Making the declaration before a suitably qualified person was a fundamental part of the statutory regime. 

Because this requirement hadn’t been met, there was no valid declaration of solvency for the purposes of section 89 of the Insolvency Act 1986 (the Act).

As a result, the liquidation took effect as a CVL rather than an MVL under section 90 of the Act. 

The court refused to waive the defect and found that it had no power to rescind the CVL, as the voluntary liquidation arose from shareholder resolutions rather than a court order.

The court did, however, grant a stay of the CVL without a time limit. While this provided some relief, the judgment underlines that a stay isn’t the same as curing the original defect or converting the process back into an MVL.

What does the decision mean for insolvency practitioners?

The judgment is a reminder that the declaration of solvency isn’t a box-ticking exercise.

Before proceeding with an MVL, insolvency practitioners should check that the required directors have made the declaration within the correct timeframe and before a person authorised to administer statutory declarations. A defect at this stage can materially change the nature of the liquidation and may not be possible to fix later.