The compulsory liquidation of a company is generally a last resort as it needs to go through the courts, which can be a lengthy process. It’s usually initiated by a creditor who wants to get their money back.
The most common reason for a compulsory liquidation is that the company is insolvent and unable to pay creditors. Usually one creditor initiates the liquidation. They need to do this by filing a ‘winding up’ petition in court.
If you’re being threatened with compulsory liquidation, we might be able to stop the process and find an alternative solution for you.
The compulsory liquidation process
During the initial court hearing, a judge will decide whether the company liquidation should go ahead. If you have objections, you need to present your case at this stage.
Should the judge agree on the liquidation, an official receiver is appointed by the court. You and your creditors can also appoint your own licensed insolvency practitioner to help you through the process.
Your company assets will be sold by a liquidator and the proceedings distributed to the creditors. The liquidator’s fees are also paid out of the sale of assets. When your company has been through the liquidation process, it must stop trading. It’s also removed from the register at Companies House. If you’re being threatened with compulsory liquidation and need advice, contact us for a free consultation.