What are the options for the consolidation of special purpose vehicles (SPV’s) for a university?

Guides and Advice
Published: 28th October 2021
Area: Corporate Restructuring & Insolvency

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Special Purpose Vehicles and consolidation

When it comes to corporate restructuring and insolvency, there are various options for universities wanting to consolidate.

Many universities will have incorporated separate companies to carry out certain operations, such as the provision of catering supplies or nursery services, with many operating profitably and providing a service to students, staff, and the local community.

Similar special purpose vehicles (SPVs) may also have been set up to deal with a particular piece of research work or to work alongside external bodies in a joint venture arrangement.

Some of these SPVs may be lying dormant after a research project or specific initiative has fulfilled its objective or come to a close. Keeping these companies on the books can increase administration costs for accounts and compliance teams unnecessarily, or the SPV could be sitting on valuable cash or assets that could be reinvested into new projects.

Taking the time to tidy up the corporate structure of a university can have many benefits and there are three options;

  • strike the company off from Companies House
  • a members’ voluntary liquidation
  • creditors’ voluntary liquidation.

Strike off

If a company has been inactive for at a period of least three months and satisfies certain other criteria, it can simply be removed from the register of companies and dissolved by a simple application accompanied by a small fee payable directly to Companies House.

This procedure is quick and inexpensive but may not be the right option, particularly if the company in question has outstanding liabilities to third party creditors.

Any application to strike off must be given to all creditors of the company and will also be advertised in the London Gazette. As a result, any creditor could object to the striking off process.

If the company has valuable assets, striking off is not advisable either as any assets will vest in the Crown bona vacantia following the dissolution. Striking off will not, therefore, benefit shareholders where assets remain within the company or creditors if the company has significant liabilities.

If the company has a combination of both assets and liabilities, the more appropriate route is likely to be a formal insolvency process led by an insolvency practitioner as liquidator.

There are two alternative routes for a voluntary liquidation process. Both are initiated by the directors of the company (as opposed to compulsory liquidation, which is commenced with a winding up petition).

Members’ voluntary liquidation (MVL)

A members’ voluntary liquidation (MVL) is a “solvent liquidation”. It can only take place if the directors of the company are able to swear a statutory declaration of solvency whereby they must confirm that all liabilities of the company (including employee claims, debts to suppliers, HMRC, or joint venture partners), together with interest if applicable, will be paid off within 12 months of the declaration of solvency.

An MVL may help simplify corporate structures or have the advantage of allowing a tax efficient distribution of assets as part of a reorganisation process. Once any creditors’ claims have been settled, any surplus in terms of assets can be distributed by the liquidator to the university or individual shareholders and at the end of the liquidation process, the company will be dissolved.

Directors must exercise caution when swearing a declaration of solvency as making a false declaration can lead to criminal proceedings against the director(s).

Creditors’ voluntary liquidation (CVL)

If the directors are aware the company is not able to pay its liabilities from the realisation of its available assets, it is effectively insolvent and the process to place the company into creditors’ voluntary liquidation should be followed.

This is a procedure where the company’s creditors have an active involvement, including the choice of the liquidator and participation in decisions regarding the liquidator’s remuneration and strategy.

How can we help?

We are able to advise you on the most appropriate route in any restructuring exercise and can provide you with the relevant legal advice covering real estate, corporate and taxation issues that frequently arise.

We work regularly with the leading insolvency practitioners with expertise in the sector and can assist you in making the right choice of the most suitable liquidator, dovetailing with them to ensure any corporate reorganisation is ultimately successful.

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Sean’s practice is focused on restructuring and insolvency, covering complex investigatory work as well as transactional and advisory assignments.


Working with higher and further education institutions, independent providers, academies, and schools, our full-service team can advise on any legal issue that an education institution may have. This includes regulatory and policy work, employment issues,  student matters, governance and constitutional questions, partnerships and collaboration, disputes, large-scale capital projects, and estates master planning.

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