Compulsory liquidation is a process where the court orders that the company is wound up, following a winding-up petition being presented to the court. It is the only way an unsecured creditor can directly bring about the liquidation of a company.
Who can Present a Petition for a Compulsory Liquidation?
In most cases, it will be a creditor who is owed at least £750 and has outstanding debt at the date of presenting the petition. In less frequent cases, a petition could be presented by:
- an administrator.
- an administrative receiver.
- the company itself or the directors.
- a supervisor of a Voluntary Arrangement.
- The Financial Conduct Authority.
- The Secretary of State for Business Innovations & Skills.
What Happens Once the Court Orders the Company be Wound Up?
In the first instance, the Official Receiver (OR) is appointed as liquidator of the company. The OR may appoint an insolvency practitioner as liquidator in his place. This may also happen if a majority of creditors support the appointment of an insolvency practitioner.
The liquidator realises assets, agrees creditors’ claims and distributes funds by way of dividends before issuing a final report on the liquidation. The OR will continue to investigate the conduct of the company officers, even if another liquidator is appointed.
What Services can PBC Business Recovery & Insolvency Undertake?
PBC Business Recovery and Insolvency can undertake the following services:
- We can advise directors whether compulsory liquidation is appropriate.
- Where appropriate, we will direct you to a firm of solicitors who will assist you in the presentation of the petition.
- We can act on behalf of creditors concerned about a company and if appropriate arrange for solicitors to assist you in the presentation of a winding up petition.
- Depending on the issues surrounding the company, we may agree to act as liquidators.