Compulsory Liquidation - Process
The Petition
A petition is presented to Court for the company's winding-up and a date set to hear the petition. A copy of the petition is served on the company. The petition to wind up the company must be advertised in the London Gazette not less than 7 days before the court hearing date.
The Winding-Up Order
Assuming the petition is not defended, at the hearing, the Court has various options including the dismissal or adjournment of the petition. However, the Court cannot refuse to make a winding-up order on the basis that a company has no assets.
If a winding-up order is made, any disposal of property or shares, after the date of the petition is void, unless the Court orders otherwise. Consequently, a company that carries on trading after receipt of a petition could find that a subsequently appointed Liquidator takes action to recover assets/money dissipated during this period.
Interview of Directors
The directors will be notified and will be required to attend an interview at the Official Receiver's office and complete a statement of the company's assets and liabilities.
The Official Receiver also has the task of investigating the company's affairs including the reasons for failure.
Appointment of a Liquidator
The Court can appoint a Provisional Liquidator if there appears to be a need to protect the company's assets. Alternatively the Official Receiver has 12 weeks to decide whether to convene a meeting of the company's creditors to appoint an Insolvency Practitioner(IP) as Liquidator.
The process to wind-up a company can be complex and expensive. It is generally much quicker and far less troublesome to wind up a company voluntarily. Also the implication is generally that the directors have failed to take the necessary action to wind up the company.
The Next Step
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