Company liquidation

Compulsory liquidation


Compulsory liquidation is when a company or limited liability partnership (LLP) is unable to pay its debts and is ordered by the High Court to be wound-up. If the High Court receives an application, known as the winding-up petition, from a relevant person, it can make a winding-up order.

Submitting a winding-up petition

Usually, a petition for the winding-up of a company or LLP is presented by one or more creditors but it can be made by:

  • a company or LLP itself
  • the directors or shareholders of a company or designated members of an LLP
  • the supervisor of a voluntary arrangement
  • the administrative receiver or administrator
  • the Department for the Economy (DfE)
  • the Financial Services Authority
  • a clerk of the High Court
  • the official receiver (OR)
  • a Member State Liquidator
  • the Attorney General (in the case of a charitable company)
  • the Regulator of Community interest companies
  • the Director of Public Prosecutions

A winding-up petition can still be presented even if a company or LLP is already in administrative receivership or voluntary liquidation.

Circumstances behind a winding-up order

A winding-up order can be made if:

  • the company or LLP has decided that it should be wound up by the court
  • the company or LLP has not yet been issued with a trading certificate, despite being registered as a public limited company or LLP more than a year previously
  • it is an old public company
  • the company or LLP has not begun trading within a year of its incorporation or has suspended its trading for a whole year
  • the number of members is less than two, unless it is a private company limited by shares or guarantee
  • the company or LLP cannot pay its debts
  • the company or LLP has reached the end of a moratorium without approval of a voluntary arrangement
  • the High Court decides that this would be just and equitable

Compulsory liquidation and liquidators

The OR will become the liquidator when a winding-up order is made against a company or an LLP - unless the court decides against this. A copy of the winding-up order must be sent to the Registrar of Companies and placed on the company's public record.

As the liquidator the OR must:

  • investigate the company's or LLP's affairs and the causes of the failure
  • decide whether to call a meeting of creditors, contributories and members to find a replacement liquidator in their place
  • notify creditors, contributories and courts if they decide not to call a meeting

If the company or LLP has a number of assets the OR may seek to appoint an insolvency practitioner (IP) as liquidator. If an IP is appointed, the IP must notify the Registrar of Companies of their appointment as soon as reasonably practicable.

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    0800 083 8018
Developed with:
  • Department for the Economy