Corporate Simplification / Solvent Liquidation has been saved
Corporate Simplification / Solvent Liquidation
Legal Entity Reduction: Simplifying entity structures and exiting non-core businesses/operations
How do we help our clients?
We help our clients to simplify their legal structures, maximize value for shareholders and exit non-core businesses and operations.
Corporate simplification/ Members Voluntary Liquidation is an effective way of delivering long-term strategic cost savings and compliance benefits to an organisation. The Deloitte team advise on the most appropriate method to wind down, close and eliminate both active and dormant companies, acting as solvent members’ voluntary liquidators if circumstances dictate.
Eliminating a company by way of a members Voluntary Liquidation
Dissolving a solvent company that has ceased trading or is dormant.
Once the directors and shareholders decide to put a company into liquidation, they appoint a liquidator via a board meeting and a shareholders’ resolution.
Once appointed the liquidator will:
- Pay any outstanding creditors
- Ensure all tax returns are brought up to date
- Obtain tax clearance from the Revenue Commissioners
- Distribute any surplus funds to the shareholders
- Call a final meeting of the shareholders to dissolve the company
- Savings on ongoing audit and accounting costs
Savings in Management Time
- Savings in management time previously taken up with the preparation of financial information and tax returns.
- Reducing risk to the company and its directors by avoiding corporate memory loss. This can happen when a company is being inactively maintained.
- Can be a very tax efficient method of distributing cash/ assets to shareholders.
Averts Risk of Involuntary Strike Off
- Averts the danger of an inactive company being involuntarily struck off which can result in the loss of a company’s limited liability protection.
Legal Entity Reduction – Simplifying a group structure
The elimination of legacy entities that serve no further economic purpose.
If you’ve recognised that you have an inefficient and un-wieldy group structure that’s driving cost and compliance you’re not alone!
The last 5-year period has seen a significant increase in the number of company voluntary eliminations as boards seek to reduce extraneous compliance costs and improve governance, efficiency, transparency and risk. The cost of retaining entities fluctuates from client to client but based on their feedback the typical payback period for an entity reduction project is 9 to 12 months.
- Predominantly people and process time. Clients tell us that once the "cost" for senior management time is factored in, project payback following a Legal Entity Reduction exercise, is typically 9 to 12 months and some state a much shorter period.
- Less corporate governance and compliance duties with simplified group structure.
- For all stakeholders with substantially fewer subsidiaries listed in the group’s accounts.
- Simplified intra group matrix, accelerated accounts preparation, fewer mis-postings and push value up the group structure.
- Free up committed assets in heavily capitalised subsidiaries.
- By dealing with the “unknown unknowns” during a liquidation process and the ability to disclaim onerous leases or contracts.
Before embarking on an entity reduction project these are some typical issues to consider.
- Is there a good knowledge of the corporate history of the entities targeted for elimination? What legacy issues could remain within the entities and if so, do I know how to deal with them, in an optimal manner?
- Is there complete knowledge of all actual/contingent assets within the entities? If so, do I know how to avoid these assets potentially passing to the state upon dissolution? Likewise, failure to distribute assets correctly could cost thousands of euros in additional taxation charges.
- Do I know how to release trapped capital effectively, navigate lease savings and protect IP?
In short, it generally pays to take early advice before embarking on an entity reduction project. As a first step we would be delighted to discuss your needs and challenges, how to best address issues (for example those highlighted above) and how to structure a cost-effective project that minimises the impact on your internal teams.
Case studies tbc
How we can help
Our Corporate Simplification/ Members Voluntary Liquidation experts can guide you through all aspects of the process by:
- Providing a free and confidential consultation to discuss your needs and challenges, how to best address the issues and how to structure a cost-effective project that minimises the impact on your internal teams.
- Assisting you in putting companies into liquidation and acting as liquidator if required.
- Providing a comprehensive, low cost, service that is excellent value for money.
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