COMPULSORY LIQUIDATION

When a creditor has exhausted all avenues to recover a debt, he/she will appoint a solicitor or debt collector to collect the debt. The debt must be over £750 and undisputed with the creditor having notified the debtor of intent to collect. If the debtor fails to pay the statutory demand within 21 days and does not dispute the debt, the creditor may then issue a winding-up petition.

The application for a petition will be granted where it can be proven to the court's satisfaction that the debt is undisputed, attempts to recover have been undertaken and the debtor remains non-compliant.

A petition will be issued and a court hearing date granted. Once the petition is served on the company, it is given a period to pay the debt or to defend its action. As the action is channeled through the High Court, a Barrister might be required to defend the action. If the case is found, the company is wound-up by the court.

The petition is advertised in the London Gazette whereupon banks will monitor the situation carefully. Bank accounts will be frozen immediately and all trading will cease ensuring that assets cannot be sold.

Compulsory liquidations are most often used by the Crown Services.

To discuss Liquidations call Philip Wood on 01782 713700.