Company Closure Services

Compulsory Liquidation

Compulsory liquidation (WUC) is a formal insolvency procedure which results in a company being forcibly shutdown.

"Gareth talked me through the problems facing my company in a manner that was comprehensive and easy to understand. He offered sound advice that presented all my options to allow me to make the correct decision for my circumstances and helped put my mind at ease."
– Director of a limited company

Who is compulsory liquidation for?

Compulsory liquidation (WUC) is a formal insolvency procedure which results in a company being forcibly shutdown. The compulsory liquidation process is typically initiated by disgruntled or otherwise outstanding creditors of a limited company through a court order known as a Winding Up Petition (WUP). A WUP notifies a company that a petition has been lodged to bring about the closure of the business and the liquidation of its assets.

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Benefits of a compulsory liquidation

In the case of Compulsory Liquidation, a creditor has usually been chasing the company for payment of a significant amount, and on finding themselves unable to collect what is owed, they petition through the courts for the company’s liquidation.

While liquidation is never the ideal situation for a limited company director to find themselves in, for some it is the most appropriate way of dealing with company insolvency and minimising the losses to outstanding creditors.

 

How does a compulsory liquidation work?

Alternatives to Compulsory Liquidation

If you have received a winding-up petition on behalf of a disgruntled creditor, your company has seven days to respond or the courts will look to issue a Winding Up Order which is, effectively, an order to shut down your company.

As a company director, you must take action immediately on receiving the WUP if you wish to save your business and prevent it from being forced into compulsory liquidation. At this stage it is too late to place the company into Creditors’ Voluntary Liquidation (CVL), and you are no longer able to sell the company or any of its assets.

However, a Company Voluntary Arrangement (CVA) or placing the company into administration may be available options depending on your company circumstances and likely long-term viability. Alternatively, you could also take steps to defend the petition if you dispute the debt being chased.

If you are unable to pay the amount required to settle the WUP or negotiate a rescue solution, your company will be wound up by the courts and your conduct as a director will be investigated by the court-appointed Official Receiver or liquidator.