Avoid Compulsory Liquidation

Compulsory liquidation is a legal process that forces a company to close and sell off its assets to pay off its debts. It is initiated by a creditor who files a petition with the court, alleging that the company is insolvent and unable to pay its debts.

How does Compulsory Liquidation Work?

If the court grants the petition, also known as a winding up order, the company will be placed into compulsory liquidation. A liquidator will be appointed to oversee the process of selling off the company’s assets and distributing the proceeds to the creditors. The company will then be dissolved.

Who can Initiate Compulsory Liquidation?

Any creditor of a company can initiate compulsory liquidation. This includes employees, suppliers, landlords, and other businesses.

What are the Effects of Compulsory Liquidation?

Compulsory liquidation has a number of effects on the company, its creditors, and its employees. These include:

• The company will be forced to close and cease trading.
• The company’s assets will be sold off to pay off its debts.
• The creditors will receive a portion of their debts, if anything.
• The employees will lose their jobs.

Avoid Compulsory Liquidation

Your last resort is to allow your company to be compulsorily liquidated – this is to be avoided at all costs. We can help you understand your options with the goal of securing a better outcome.

Potential routes to avoid Compulsory Liquidation

• Creditors’ Voluntary Liquidation (CVL)
  Initiate the liquidation yourself. You will have more say in the process and hopefully achieve a better outcome.
• Company Voluntary Arrangement (CVA)
  A CVA could ease your cash flow and help turn around your business.
• Pre-Pack Administration
  This closes your old company and opens a debt-free new company, whilst almost seamlessly continuing to trade.
• Administration
  Administration is a key insolvency tool to implement the rescue and survival of the business and provides the company with immediate protection from creditors.