Can I Stop A Company Going into Compulsory Liquidation?

  • If a company is threatened by compulsory liquidation (through the court is the only way to force compulsory liquidation) then fast action is essential
  • A company will need to have received a copy of a winding-up petition before it can be forced to be wound-up through the courts
  • The winding-up petition document will have a date on it of when the court will consider whether a company should be placed into liquidation – known as the hearing date
  • It is possible to ask the court to give more time to allow a company to try to reach agreement with the person that is trying to force liquidation on a company – this is known as adjourning the hearing or an adjournment
  • The next stage of the compulsory liquidation process is likely to be the advertising of the process in the London Gazette – a government publication for legal information
  • Once the advert is placed then a company’s bank is likely to freeze the company’s bank account
  • Once a company’s bank account is frozen the most likely way to allow a payment to be made will through a process known as a validation order, which requires an application to court
  • If a winding-up petition has not been presented, then a company is free to reach agreement with those it owes money to or to consider other rescue or closure options
  • If a winding up petition has been sent in to court against a company, then that company must try to agree payment with the person who is trying to force the company to close
  • If agreement for repayment can’t be achieved, then the court is likely to agree that the company should be liquidated
  • It’s quite common for a person that is trying to wind-up a company compulsorily will consider allowing the company to liquidate through a voluntary route
  • Such a voluntary liquidation will need to take place quickly and before the company is wound up through the courts

Insider Tips:

There is a cost to a person who wishes to force a company into compulsory liquidation. If the person who has presented a winding-up against a company is likely to want to have their costs paid for before they will consider allowing a voluntary liquidation