A compulsory liquidation is a liquidation by order of the Court ("winding up order"), usually following a petition from a company creditor. In some circumstances the company or a shareholder may petition to liquidate the company.
The most common reason for the making a winding up order is the company's insolvency and the petitioner will be required to establish this. Usually a creditor will do this by showing that the company has failed to comply with a Statutory Demand.
Once a winding up order is made the company is referred by the Court to the Official Receiver ("OR") who is a civil servant and will act as Liquidator.
The OR may seek to appoint an independent Insolvency Practitioner as Liquidator who will then look to realise the company's assets and distribute these amongst creditors. The directors will have no control over this process or the choice of Liquidator.
The OR will also conduct a full review of the directors conduct and investigate the reasons for its insolvency.
To discuss compulsory liquidation and the alternatives please book a free, confidential, no obligation meeting by calling one of our experts at Currie Young on 01782 394500