Compulsory Liquidation

How To Stop Compulsory Liquidation; Options

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Compulsory Liquidation

A compulsory liquidation will most frequently start with a statutory demand or county court judgment (CCJ) from a creditor for money owed.  Left unanswered or undisputed, that creditor may submit a winding up petition to the court.  It requests that a winding up order be made to liquidate or 'wind up' said company, as it is insolvent.  It is through compulsory liquidation and the appointment of an Official Receiver that the assets of a company are forcibly realised and distributed to the creditors to pay debts.  Once winding up is complete, the company will be dissolved. 

Stop Compulsory Liquidation

Attempts can be made to stop compulsory liquidation.  The bid made though, can hinge upon how quickly advice is sought from a licensed insolvency practice (such as us) and preventative action taken.

As with the adage, “prevention is better than cure” it is better to avoid compulsory liquidation in the first place, rather than trying to undo it.  A Creditors' Voluntary Liquidation (CVL), which is a process instigated by directors rather than creditors, is normally a preferable alternative to a compulsory liquidation.  Contacting us before a compulsory liquidation happens, could mean a CVL is possible as an alternative.

A CVL being better than compulsory liquidation as: 

  • the directors take control of the situation and instruct an insolvency practitioner that they choose to work with
  • opting for a CVL gives control over timescales, in conjunction with the insolvency practitioner
  • court processes are avoided
  • expensive ‘ad valorem’ costs which apply to compulsory liquidation, are avoided
  • director redundancy payments can be claimed and used to fund the CVL

If you immediately contact us following a compulsory winding up order (UCO) being made it is possible to make an application to the court to rescind the winding up order, if the court did not have all the relevant facts when making the winding up order.  For instance, you may have plans to:

Compulsory Liquidation advice & action6 Reasons to choose us to stop compulsory liquidation


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