Compulsory liquidation

A compulsory liquidation is a liquidation which is ordered by the Court, usually on the petition of a creditor but may also be on the petition of the company, a shareholder or even the Secretary of State.

Once the winding up order has been made the Official Receiver becomes liquidator and has a duty to investigate the affairs of the company and report to creditors. If there are sufficient assets the Official Receiver may consult with creditors to appoint a Licensed Insolvency Practitioner as liquidator in his place to deal with asset realisation and paying dividends, if possible. The Official Receiver retains responsibility for investigating the conduct of the directors and other officers as well as any other investigation work required.

Once the winding up petition has been issued there is only a short period of time before the petition can be advertised in the London Gazette. This will likely result in the company’s bank account being frozen and stopping the company from trading. It is therefore imperative that advice is sought once a winding-up petition or statutory demand has been received.