Fraser Frayne Insolvency Practitioners Limited
Old Canal Cottage
Bath BA2 8BS
Tel/Fax: 01761 437754
The Compulsory Liquidation procedure is for insolvent companies to wind up their financial affairs in an orderly manner and can be a useful alternative to Creditors’ Voluntary Liquidation.
The detail of what happens:
An insolvent Company may be wound up at the instigation of the Board of Directors, or by shareholders, or creditors, or at the instigation of the Court or the Secretary of State. Creditors however, must be owed more than £750.
If the Company does not successfully object to a petition being heard and an Order being granted in Court, then, if the petitioner is successful, the Court will order that the Company be wound up and placed into Liquidation. Usually, the Official Receiver is appointed as Liquidator, although it is possible for an Insolvency Practitioner to be appointed.
If there are enough assets, then an Insolvency Practitioner may be appointed in succession to the Official Receiver, usually at a creditors’ meeting.
The Liquidator’s tasks can be quite varied, but primarily is to realise the Company’s assets, distribute funds to creditors. The Liquidator has considerable legal powers if necessary to assist him in his tasks and duties.
The Official Receiver will undertake any investigations into the activities of the directors and Company.
Whilst Compulsory Liquidation is a court ordered procedure and, therefore, can be quite cumbersome and slow, it does have the merit of being relatively cheap at the outset, so is an attractive option for responsible directors faced with an insolvent Company and not much in the way of funds.
This outline is general and may not apply to a specific company’s circumstances for which a Compulsory Liquidation may not be appropriate. The outline, views and suggestions set out are not intended to constitute professional advice, nor to be a substitute for specific advice.
© 2009 Fraser Frayne Insolvency Practitioners Limited
Registered in England Co. No. 6934426 VAT No. 972 6786 64
Registered Office: Old Canal Cottage Dunkerton Bath N E Somerset BA2 8BS
Company Secretary: Fraser Watt; Director: Matthew Frayne BA, FIPA, FABRP
Licensed Insolvency Practitioner licensed by the Insolvency Practitioners Association
Valiant House 4-10 Heneage Lane London EC3A 5DQ