The following is a summary of the steps involved in an unconnected creditor placing your company into compulsory liquidation and what happens afterwards:
- The company experiences financial difficulties and has trouble paying its debts. As creditors pressure mounts, a creditor issues a…
- Statutory Demand: this is a formal written demand issued by a creditor seeking payment of an undisputed debt of at least £750, giving you 21 days to pay. If you fail to pay the debt or set aside the Statutory Demand, the creditor will then issue a…
- Winding-up Petition: This a simple document, lodged in the court by the creditor asking the court to put the company into liquidation. You get to know about this by receiving a…
- Petition notice: You are told of the petition! The creditor may then try to negotiate, for the final time, payment of their debt. If you do not negotiate an acceptable settlement of the creditor debt, the next step is…
- Publication of petition: The fact that a winding-up petition is being sought by a creditor is published in the London Gazette. Immediately on seeing this appear in the gazette your bank will freeze your accounts. There is then a delay until the…
- Court hearing: A hearing will take place in court to decide if a winding-up order should be made. Often there are dozens of such winding up orders made at the same hearing, the companies not fighting them. This will result in a …
- Winding-up order: This is an order made by the judge placing the company into compulsory liquidation. In 99% of cases, the Official Receiver – a government agency – will then automatically be appointed as liquidator, the OR will take control of all the company’s assets. All employee contracts are automatically terminated on the making of the winding up order. Your powers as director cease. Then…
- The Official Receiver will carry out an initial interview in a fact-Finding exercise to ascertain what actions he must take quickly. Later there will be a longer interview.
- The Official Receiver will then get on with his work – realising what assets he can, pay the costs of the liquidation – as far as he can – and if there are sufficient realisations after costs to enable him to make a distribution, pay the money out in a prescribed order. He will also investigate your conduct as a director.
- After he’s finalised his work, the Official Receiver will send a final report to creditors and the company will then be dissolved.