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A compulsory liquidation is in place
for a company when a court makes an order that the company
should be wound up.
The Petition
A company cannot be wound up by the court
unless a petition is first presented to the court by an interested
party.
Interested Parties
The usual 'interested party' who applies
to the court for the issue of a winding up petition is an
unsatisfied judgement creditor of that company. (eg a trade
creditor, loan creditor, H M Customs and Excise or the Inland
Revenue)
The Issue of the Petition
The court stamps the petition with a
date of issue. That 'issue date' is most important for reasons
which will become apparent in the case study. The petition
also records the future date on which it will be heard. The
petition is then served on the company concerned and the petition
is also advertised in the London Gazette. It is this gazetting
that can bring the existence of the petition to the company
bankers and others.
The Hearing of the Petition
Approximately one to one and a half months
after the issue of the petition the court will "hear"
the petition. What this means is that the court will listen
to representations made by the applicant creditor and defence
arguments put forward by the company subject to the petition.
At this hearing very often a winding
up order is made and the company is placed into compulsory
liquidation.
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