Compulstory Liquidation


Compulsory Liquidation occurs where one or more creditor has given up trying to recover monies owed to them by a company and proceed to liquidation via a Winding Up Petition.

Creditors can petition for Compulsory Liquidation if the aggregated debt is more than £750.00.  The debtor company will be served with a Winding Up Petition and will have the opportunity to attempt to contest it or take steps available to try and avoid liquidation.

One of the most important things for a creditor considering issuing a petition to be aware of is that, even if the debtor is able to pay off the petitioning creditor this may not mean that the petition gets withdrawn.

Another creditor still may apply to the court to be substituted as petitioning creditor and seek an order of the court to wind up the debtor company.




At least seven days before the Winding Up hearing is set to take place the petition for Compulsory Liquidation will need to be advertised, usually in the London Gazette. This can be incredibly damaging because the Gazette is carefully monitored by high street banks and lenders who may decide to freeze the debtor company bank accounts to preserve the assets of the company.

At the hearing, unless the debt is paid, successfully disputed or the debtor company can satisfy the court that it is in fact solvent, a Winding Up Order is likely to be made.

The Official Receiver becomes the liquidator of the company and will be required to investigate the company’s affairs.  The Winding Up Order will also be advertised in the London Gazette.