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A compulsory liquidation is a court driven process whereby a Winding Up Petition has been presented against the Company, a court date to hear the petition has been arranged, and a Winding Up Order is made at that hearing.



Simply put, a Winding Up Petition is an application made to court to bring the life of a Company to an end.


A Petition is, usually, presented by a creditor of the Company when they have attempted to recover their debt from the Company and it has not been received. (A director or shareholder could also present the Winding Up Petition if they wish to bring the life of the Company to an end).


A Winding Up Petition is often seen as a last resort because you are asking the Court to bring the life of the Company to an end and for a Liquidator to be appointed. Therefore, if you are seeking repayment of your debt, you are gambling that there are going to be sufficient assets in the Company to repay all costs of the liquidation together with all creditors without being able to trade any further.




Once a winding up order is made the Company is officially in compulsory liquidation. As a result, the following are likely to happen:


1.   A Government Civil Servant called the Official Receiver will be appointed as Liquidator of the Company. They will have 3 duties; 1. Protect and preserve the assets of the company, 2. Make enquiries into the company dealings and 3. Make a report under the Company Directors Disqualification Act.



2.   The Company must cease to trade unless specifically ordered not to by the Official Receiver,


3.   The Company will be listed as being in Liquidation on Companies House website,


4.   The Liquidation of the Company will be advertised in The London Gazette, a legal notices paper, which will provide the Company's bankers with notice. Therefore if it did not happen on advertisement of the Petition, the Company's bank accounts will be frozen,


5.   All employees of the Company will be made redundant unless the Official Receiver decides that a short period of trading is required for the benefit of the Liquidation,


6.   The directors lose their authority in respect of dealing with the Company's affairs, and


7.   The Directors have to attend at the Official Receiver's office for an interview with the records of the Company.



Allowing a Winding Up Order to be made against your Company or a Company that owes money to you is a terminal option from which there is no return. There are many ways to save your Company if there is a Winding Up Petition against it and I have previously written a blog on the subject here:


As always, should you wish to discuss Winding Up Petitions or Compulsory Liquidations or any other insolvency matter in more detail, please do not hesitate to get in contact. Telephone: 01326 340 579, Email: