Can I Use Voluntary or Compulsory Liquidation for a UK Company?

  • A compulsory liquidation will usually be started by winding-up petition being sent to court
  • A winding-up petition is sent to court to ask the court to wind-up a company and place it into liquidation
  • The petition will need to be presented along with evidence that a company has not paid money that it is due to pay, and that this is because it is not able to pay – also known as proving insolvency
  • A request to wind-up cannot be sent if the company cannot be shown to be insolvent
  • After the court receives a winding up petition then a date will be set to consider the request for the company to be wound-up – this is known as the hearing date
  • If a company can’t pay what it owes, then compulsory and voluntary liquidation are both choices
  • As a company must be insolvent to enter compulsory liquidation, a compulsory liquidation is not a way of liquidating a solvent company
  • If a company is solvent, then a voluntary liquidation is the correct process

Insider Tips:

A voluntary liquidation does not involve the courts or the government Insolvency Service.