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Compulsory liquidation


1. What is 'compulsory liquidation'?

Compulsory liquidation of a company is when the company is ordered by a court to be wound up.

2. Which courts can order a compulsory liquidation?

The Court of Session, or Sheriff Court with the appropriate jurisdiction, may order the winding-up of a company. This may be, for example, on the petition of a creditor or creditors on the grounds that the company cannot pay its debts.

A company 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 (Scot)) to the company; and
the company fails to pay, secure or agree a settlement of the debt to the creditor's reasonable satisfaction.
?There are other situations where a company is deemed unable to pay its debts. Please read the relevant legislation.

The court may also order the company to be wound up on the petition of:

the company itself;
the company's directors or one or more members;
the Secretary of State for Business, Innovation and Skills; or
the Financial Services Authority (formerly the Securities and Investment Board).
In the case of a European company (SE) registered in GB, the Secretary of State may petition the Court for a winding up order on the grounds that it appears that the SE does not have both its head office and registered office in GB. For more information on SEs, please see our guidance on 'The European Company: Societas Europaea (SE)'.

3. Must the petition be advertised?

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

4. What appears on the company record held by Companies House?

If the petition is successful, the company must send Form 4.2 (Scot) and a copy of the winding-up order to the Registrar and AIB straightaway and it will be placed on the company'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 company?

A provisional liquidator may be appointed after the petition is presented. If a winding up order is made, an interim liquidator is appointed. Both the provisional and interim liquidator must notify AIB of their appointments.

6. What are the duties of the interim liquidator?

Within 28 days of the appointment, the interim liquidator investigates the company's affairs and will call meetings of creditors and contributories (that is, those people liable to contribute to the assets of a company in the event of it being wound up). The meetings appoint the official liquidator who must notify AIB within 7 days. If no liquidator is appointed at the meetings, the court appoints a liquidator.

The liquidator must send to AIB a statement of receipts and payments for the first 12 months of liquidation and thereafter every 6 months until the winding up is complete.

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

When the Registrar and AIB receive notice from the liquidator of the final meeting that winding-up is complete, the Registrar will register it and publish its receipt in the Edinburgh Gazette.

Unless the Court directs otherwise, the company will be dissolved three months after the notice was registered at Companies House.

If the liquidator is satisfied that the company'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 company's affairs is necessary, he or she may apply to the Registrar for early dissolution of the company. The company will be dissolved 3 months after the application is registered at Companies House

8. Which forms should be used?

The appropriate forms are:

Form title Number
Statutory demand for payment of debt 4.1 (Scot)
Notice of winding-up order 4.2 (Scot)
Liquidator's statement of receipt and payments * 4.5 (Scot)
Notice of liquidator's statement of receipts and payments * 4.6 (Scot)
Notice of appointment of liquidator 4.9 (Scot)
Notice of final meeting of creditors 4.17 (Scot)
Please note: with the exception of form 600, these forms are not available from Companies House. They can be obtained from company law stationers or by visiting the Insolvency website.

Forms 600, 4.4, 4.5 and 4.6 to be sent to AIB.
Forms 4.17, 4.26, 4.27 and 92 to be sent to Companies House Edinburgh and AIB.