Compulsory Liquidation Process

Failing to pay a company’s creditors on time may lead to it being served with a statutory demand or a winding-up petition. We can provide you with specialist advice, which could help avoid the company being placed into compulsory liquidation by the court.

The majority of petitions are served by HMRC who use compulsory liquidation as part of their debt collection process. We can help you deal with HMRC and their debt recovery department.

If you receive a winding-up petition, it is important to seek advice as soon as possible. The petitioning creditor is required to advertise the petition in the London Gazette at least seven business days after it has been served and at least seven business days before the hearing. The advertisement of the petition has the effect of putting it on public record and can have serious consequences for the company. For example, the company’s bank account may be frozen, or suppliers may suspend deliveries. Once advertised, the court must hear the petition, even if the petitioner has been paid. Other creditors can join in or be substituted for the petitioning creditor at the court hearing.

If contacted soon enough, we can assist the directors with reassessing the financial position of the company. Our licensed insolvency practitioners are able to advise on and assist with options such as:

• Contesting the petition; a witness statement in opposition must be filed in court not less than five business days before the hearing date
• Reaching an agreement with the creditors to settle debts over a period of time
• Placing the company into an alternative insolvency procedure, such as Administration, which may allow the company to be rescued or lead to a better result for creditors than liquidation