Compulsory Liquidation is the winding up of a company via the courts by a Winding Up Petition. Upon successful application, the company remains placed into Compulsory Liquidation, and the Official Receiver will be appointed liquidator.
What Is Compulsory Liquidation?
Therefore, to place a company into Compulsory Liquidation, one or more of the company’s creditors must then petition to the court for a Winding Up Petition. Once in compulsory Liquidation, however, all assets now liquidated into cash and the proceeds used to repay outstanding debts the company owes.
However, a company can only receive a winding-up petition from a creditor if they owe more than £750 and have then failed to pay. Failure to pay can be either an unpaid County Court Judgement or a formal demand which is then still outstanding.
Then the conclusion of compulsory Liquidation is the dissolution of the business. The company will cease to exist and will be struck off Companies House register, within three months of the conclusion of the Liquidation.
Can I Then Stop A Winding Up Petitions?
YES, You need to act fast.
Options available to a company facing compulsory Liquidation and winding-up petition, then vary depending on how far along you are in the process. The only way to definitively stop compulsory Liquidation or a winding-up petition is to, therefore, satisfy the outstanding amount to the creditor in full, coming to satisfactory payment terms for both parties or by then placing the company into a formal insolvency process.
Dependant on how far along the process your company is, then a few options remain available:
What Happens When A Company Enters Compulsory Liquidation Following A Winding Up Petition?
Once the winding-up petition process has then finalised, the company is now in Compulsory Liquidation. Usually, then the official receiver is appointed liquidator of the company, and they have to comply with the duties of the liquidator.
If the official receiver feels it necessary or creditors vote to appoint a third-party liquidator, a Licensed Insolvency practitioner will be selected to take the role of liquidator. Upon appointment, they then have to comply with the Insolvency Act 1986 and also comply with their duties as liquidator.
What Are The Liquidators Duties?
A liquidator has several practical and statutory duties to, therefore, adhere to in the ordinary course of a liquidation. These duties include when commencing the process of liquidation:
- The maximisation of realisations from the assets of the company than for the benefit of the company’s creditors;
- Reporting to creditors on the progress of the Liquidation and, then where appropriate, seeking creditor approval for specific actions within the Liquidation;
- Where appropriate, the collation and agreement of creditor claims against the company;
- The distribution then to creditors of all available funds realised through the liquidation process;
- Investigating, reporting, then the conduct of the company directors before the company’s Liquidation.
The Consequence of Compulsory Liquidation
The consequence of compulsory liquidation of your limited company leaves the dissolution of the company. Further, the former employees remain dismissed totally. As with Creditors Voluntary Liquidation, the former directors remain relieved of their office and powers. However, subject to no adverse report on directors conduct, the directors remain void of any personal liabilities except those personally guaranteed.
Help with a Winding Up Petition.
Let then, HBG Advisory help you; Wherever you trade in the country, we can therefore help with your compulsory liquidation & winding-up petition. We offer no obligation and expert advice from our experienced partners and consultants. Please speak then with someone TODAY.
To view our team, click MEET THE HBG ADVISORY TEAM.