Compulsory Liquidation
What
is it?
Compulsory
Liquidation is where a winding up order is made by the
court.
A company will be 'wound up' by the courts following a petition issued by one of the following:
- The company
- The directors
- A creditor
- A shareholder
- An Administrator or Administrative Receiver
A winding up order can be made on a number of grounds but the principal ones are as follows:
- The Company is unable to pay its debts as and when they fall due
- It is just and equitable (common in the event of shareholder disputes)
Who is it for?
Creditors
who have the power to wind a debtor up by appointing a liquidator to
investigate the affairs of the company and its directors/shareholders.
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The Process
Once a winding up order is made the affairs of the company are dealt with by the local Official Receiver's office who may call shareholders' and creditors' meetings at which a Liquidator may be appointed.
The Liquidator in a compulsory liquidation deals principally with the realisation of assets and the agreement of creditors claims whilst the Official Receiver investigates the company's affairs.
Advantages
- For the company - creditors force the liquidation process and therefore there is no cost to the company for the initial petitioning of the winding up
- For the creditor - the creditor can stop the company trading
Disadvantages
- For the company - the official receiver will thoroughly investigate the company and its directors
- For the creditor - the official receivers fees will deplete the value of the company assets
Call us on 0800 195 4585 to see if we can be of any assistance with
'Liquidation' matters.
