Compulsory liquidation

Compulsory liquidation is when a court informs a company that it is insolvent and must file for liquidation. A compulsory liquidation court order is the last stage of the process, the first is where a creditor issues what is known as a winding up petition against a company for unpaid debts. This is an application to the court to close or ‘wind up’ a company if it cannot pay its debts. There are different rules on winding up a company in Scotland.

In England and Wales to wind up a company the creditor must: "be owed £750 or more and be able to prove that the company cannot pay"

Specific forms must be completed and sent to the right court to apply to wind up a company. If successful: "the company assets are sold, any legal disputes are settled, the company collects money it’s owed (and) funds are paid to you and any other creditors'

This may lead to the creditor receiving all (including fees), some or none of the money owed, it is a major action against a company and there are other routes to recovering owed money, best might be to seek advise from debt specialist (or solicitor) to help recover debts.

Fees for a winding up petition in January 2025 were court fees at £332 and a petition deposit (to manage the ‘winding-up’) of £2,600.

For further information visit https://www.gov.uk/wind-up-a-company-that-owes-you-money and for Scotland visit different rules.

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