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  • Compulsory Liquidations

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    A Compulsory Liquidation occurs where a Company is wound up by the Court. A Creditor issuing a Winding Up Petition is the most common reason for winding up a company through the Court. The Courts will generally seek to determine whether the Company is insolvent prior to making an Order.  A Company is deemed to be insolvent when it is unable to pay its debts as and when they fall due and/or its liabilities exceed its assets.  This is typically evidenced by an unsatisfied judgement debt, statutory demand or on a balance sheet basis.

    A petition must be lodged with the Court requesting the winding up of a Company.  The petitioner can be any of the following; the Company, the Directors, any Creditor of Creditors, a Contributory or Contributories, the Secretary of State, the Official receiver, Administrative Receiver, Administrator or Supervisor of a Company Voluntary Arrangement.

    Once a Winding Up Order has been made, the Company’s affairs will, in the first instance, be dealt with by the Official Receiver (a government organisation).

    Key facts:

    • This is a Court driven process.
    • The decision whether or not to wind-up the Company is made by the Court.  This contrasts to a Creditors’ Voluntary Liquidation (“CVL”) where the onus is placed on the Members.
    • Once the Company is in Liquidation, responsibility over the Company’s assets and liabilities initially transfers to the Official Receiver, or on occasion to a specifically appointed Liquidator.
    • Directors’ have a fiduciary duty towards a Company and a responsibility to avoid wrongful trading.
    • The investigation into the conduct of the Directors and the trading of the Company is undertaken by a government appointed official; the Official Receiver.
    • The Director(s) are allowed to start trading through another Company subject to certain restrictions.

    How we can help:

    • We will arrange a free initial consultation with the instructing party, whether it is a Creditor, Director, Shareholder or other.
    • Evaluate the circumstances and provide appropriate and bespoke recommendations.
    • Explain the process in detail and answer any questions or concerns.
    • Assist in the preparation of the statutory forms and recommend solicitors or agents where appropriate.
    • Arrange for a member of our firm to act as Liquidator if so appointed by the Court and/or Creditors.