Compulsory liquidation (or ‘winding up’) is, in most instances, instigated by a creditor of the company, by issuing a winding up petition in court for payment of an unsatisfied debt. The court will set a date for the petition to be heard, and at the hearing, the court will, if it agrees, make a winding up order, and in most instances appoint the Official Receiver (a government official) as liquidator. In certain instances an insolvency practitioner will subsequently replace the Official Receiver as liquidator.
The duty of the liquidator is to realise the company’s assets for the benefit of the company’s creditors. The Official Receiver also has a duty to investigate the directors’ conduct for disqualification purposes.
If a creditor is applying pressure for payment or has instigated winding up proceedings, then it is important that you seek professional advice.