A compulsory liquidation is a court led process and can be instigated by one of any number of stakeholders of a company. The process is, however, typically started by a single creditor of a company that is owed more than £750.
This creditor can issue a statutory demand. If this demand remains unpaid and unchallenged for three weeks then they could start a compulsory liquidation process by issuing a petition.
As a result of this bank accounts will be frozen and a winding up order can be made against the company.
If you have received a statutory demand you should seek advice immediately as the longer it is left the fewer options will be available to you to deal with the situation.
In a compulsory liquidation instead of an independent liquidator, like those at Milsted Langdon, being appointed, an employee of the Insolvency Service (part of the Department of Business Energy and Industrial Strategy) called the Official Receiver is appointed as liquidator.
If creditors wish they can, in certain circumstances request that an independent liquidator is appointed and a firm such as ours gets appointed to deal with its affairs .
The Official Receiver will wish to talk to the directors of the company and other key staff, to discover the assets of the company and often you will be required to attend a formal interview.
The liquidator, once appointed, takes over all the executive powers of the company and is given additional powers by statute to investigate and collect in the company’s assets.
Once the investigations and assets have all been dealt with the liquidator is released and the company is dissolved at Companies House.