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Compulsory Liquidation

This is the process that creditors can use to force a company into liquidation if it fails to pay monies it owes to them in a timely manner.  It is commonly used by H M Revenue and Customs when companies fail to pay their taxes or penalties when they are due.

If you do get a winding up petition against your company, it is essential to act quickly as there may be other solutions available.  Ring us on 01302 965485.

The bank will normally freeze the account when they discover that a winding up petition has been presented against a company.  This may have a serious effect as wages may not be paid and other necessary payments such as rent.  Any actions from employees and landllords would just escalating the position further.

A shareholders of the company or its directors can instigate this process if they want their company to be liquidated, but there are insufficient assets in the company to finance a Creditors Voluntary Liquidation ‘CVL’.  We can assist you in this matter.

No matter who has made the application, it is the Court who will make the order for the winding up of the company.

After a Court order has been made, it is most likely that a Official Receiver (‘OR’) will be appointed Liquidator.  The OR will need to get information from the company in order to get a full understanding of its assets and liabilities and also for them to conduct a thorough investigation into the conduct of the directors.

The OR may appoint another Insolvency Practitioner to deal with the assets and liabilities of the company (but will remain responsible for the investigations), if it is appropriate.

A creditor or majority creditors with majority voting rights may also request a meeting of creditors is summoned to appoint a liquidator.  We will be happy to discuss this with any creditors considering this action.

A few technical points on Compulsory Liquidations

  • The company must be insolvent for an order to be made
  • A petitioning creditor must be owed more than £750 when they petition and can show that they have taken reasonable steps to recover this from the company
  • A petition can also be made if it is in the public interest for the company to be wound-up
  • A winding up petition will be advertised and will be common knowledge
  • After the petition is advertised, other creditors may attach to the petition and may be substituted for the petitioning creditors (if you pay the petitioning creditor the amount due)
  • Any transactions after the petition is presented will be looked at and transactions regarding sale of the company’s property or relating to shareholdings will be void when the company is placed into liquidation
  • A compulsory winding up can also be made as a result in a stalemate situation where shareholder disputes cannot be resolved amicably


If you have received a winding up petition or want to talk about liquidation, please contact us on 01302 965485 or by email on info@revivebusinessrecovery.co.uk



For advice to directors in the hiatus period, please click HERE

For advice for to directors and employees on Employee claims, please click HERE