The High Court’s decision in Re Cray and others [2026] EWHC 1466 (Ch) serves as a clear reminder that the requirements for the statutory declaration of solvency in a members’ voluntary liquidation (MVL) must be complied with to the letter. Failure to do so carries severe consequences: the liquidation will be treated as a creditors’ voluntary liquidation (CVL), even where the company is plainly solvent. The judgment underlines just how central the declaration of solvency is to the MVL regime, and that there is little room for error.
Key takeaways for directors
- The declaration of solvency must strictly comply with the statutory requirements. In particular, it must be made before a qualified person; otherwise, the declaration is not valid.
- A defective declaration means the company cannot enter MVL. The winding up will instead take effect as a CVL, regardless of the company’s intention or actual financial position.
- The court has no power to cure a defective declaration of solvency, convert the process back into an MVL, or undo the CVL. The only relief available is a stay of the CVL.
Background
Greenbank Technology Ltd (the Company) formed part of a wider group structure that was undergoing corporate simplification. As part of this process, the Company was to be placed into an MVL: the company’s business and assets would be transferred out, all liabilities discharged, and the company left with a nominal £1 of assets.
As part of the usual process, the directors swore a statutory declaration of solvency under section 89 of the Insolvency Act 1986 (the Act). However, one director’s declaration was made before a person who was not authorised to administer a statutory declaration as required by the Act. As a result, Companies House refused to accept the declaration, and the Company’s liquidation was instead treated as a CVL.
The Company sought relief from the court, asking its permission to either:
- Waive the defect
- Rescind the CVL, or
- Stay the CVL
The decision
The court refused to waive the defect or rescind the CVL, holding that the requirement for a statutory declaration to be made before a suitably qualified person is fundamental to the statutory regime and therefore cannot be waived. Where this requirement is not satisfied, there is no valid declaration, and the winding up must be treated as a CVL.
This was not a procedural irregularity that could be waived. The court drew a clear distinction between minor defects (for example, inaccuracies in a statement of affairs) and a failure to comply with a core statutory condition. In those circumstances, the legislation dictates the outcome: the liquidation is a CVL.
The court did confirm that it has jurisdiction to stay a CVL and was prepared to grant the stay sought. However, that was the limit of its powers.
Practical implications
The judgment clearly confirms that strict compliance with the statutory declaration of solvency is essential to a solvent liquidation.
It is therefore important to distinguish between:
- Fundamental defects, which are fatal (as in this case), and
- Technical defects, which may be capable of being waived (such as minor inaccuracies in supporting financial information)
Conclusion
Re Cray reinforces that an MVL is a tightly prescribed procedure where the statutory preconditions must be satisfied in substance as well as in form. If those requirements are not met, the intended MVL simply does not come into existence, and the company will instead fall into a CVL by operation of law. For directors and advisers, the key point is that these are not defects that can be fixed after the fact. Getting the fundamentals right at the outset is critical to ensuring the process proceeds as intended.
