Compulsory Liquidation

A Compulsory Liquidation is a Court-directed method of winding up a company. The Liquidator realises and distributes the company’s assets, and then concludes its affairs. The most common reason for a Winding-Up Order is that the company can’t pay its debts.

A Court might grant a Winding Up Order if total liabilities exceed total assets, a statutory demand greater than £750 remains unpaid for 21 days, or the company is subject to an unsatisfied judgment execution.

The winding-up application must be by petition, presented by the company, its directors, its shareholders or, more usually, creditors as a way of collecting debts owed.

The Official Receiver has considerable powers of investigation into the company’s failure. These can include assessing directors’ actions or those of a previous Receiver or Administrator.