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Compulsory liquidation

1. What is 'compulsory liquidation'?

Compulsory liquidation of a limited liability partnership is when the limited liability partnership is ordered by a court to be wound up.

2. Which courts can order a compulsory liquidation?

The High Court, or a county court with the appropriate jurisdiction, may order the winding-up of a limited liability partnership. This may be, for example, on the petition of a creditor or creditors on the grounds that the limited liability partnership cannot pay its debts.
A limited liability partnership is regarded as unable to pay its debts if, for example, a creditor:
is owed more than £750;
presents a written demand in the prescribed form (known as a statutory demand (Form 4.1)) to the limited liability partnership; and
the limited liability partnership fails to pay, secure or agree a settlement of the debt to the creditor's reasonable satisfaction.
There are other situations where a limited liability partnership is deemed unable to pay its debts. Please read the relevant legislation.

The court may also order the limited liability partnership to be wound up on the petition of:
the limited liability partnership itself;
one or more of the limited liability partnership's members;
the Secretary of State for Business, Innovation and Skills;
the Financial Services Authority (formerly the Securities and Investment Board); or
the Official Receiver.

3. Must the petition be advertised?

Unless the court directs other arrangements, the petition must be advertised in the Gazette.

4. What appears on the limited liability partnership record held by Companies House?

If the petition is successful, the limited liability partnership must send the winding-up order to Companies House straightaway and it will be placed on the limited liability partnership's public record.

The petition itself is not presented to the Registrar so it will not appear on the
public records.

5. Who acts as the liquidator when an order is made to wind up the limited liability partnership?

The Official Receiver becomes liquidator on the making of a winding-up order against a limited liability partnership, unless the court orders otherwise.

6. What are the duties of the Official Receiver as liquidator?

The Official Receiver has a duty to investigate the limited liability partnership's affairs and the causes of its failure.

He also decides whether to call meetings of the creditors and contributories (that is, those people liable to contribute to the assets of the limited liability partnership if it is wound up) for the purpose of appointing a liquidator in his place.

If he decides not to call a meeting, he must notify the creditors, contributories and the court of his decision.

If the position of liquidator becomes vacant at any time, the Official Receiver becomes the liquidator for the duration of the vacancy.

7. What happens when the winding-up is complete?

When Companies House receives notice from the liquidator of the final meeting of creditors or notice from the Official Receiver that winding-up is complete, he will register it and publish its receipt in the Gazette.

Unless the Secretary of State directs otherwise, the limited liability partnership will be dissolved three months after the notice was registered at Companies House.
If the Official Receiver, acting as liquidator, is satisfied that the limited liability partnership's realisable assets (that is, assets which could be sold or disposed of to raise money) will not cover the expenses of winding-up and that no further investigation of the limited liability partnership's affairs is necessary, he may apply to the Registrar for early dissolution of the limited liability partnership. The limited liability partnership will be dissolved three months after the application is registered at Companies House.