A creditor, who is owed more than £750 (England) or £1,500 (Scotland), once they have established apparent insolvency, can petition the court for the appointment of a Liquidator. This is also called a ‘winding up’ petition. If successful, the company will stop doing business and employing people. When you liquidate a company, its assets are used to pay off its debts, but in terms of a prescribed ranking. As most creditors are unsecured, they are last to be paid and quite often receive little or no dividend.
The liquidator acts in the interest of the creditors not the directors.
Obtaining apparent insolvency in England is done by providing evidence to the court that you’re owed this money by the company and the sums due can not be paid
Evidence can be either:
In Scotland apparent insolvency is obtained on expiry of;
In England the Petition is lodged together with court fees and a petition deposit.
In Scotland the winding-up petition goes to:
In all cases the petition must be served on the company at their registered office and advertised in the Gazette and newspapers, as directed by the court. The debtor company may lodge answers and try to defend the petition, including claiming the sums are not due.
Creditor may seek the appointment of an interim liquidator, or a provisional liquidator but may have to show there is a risk of flight, unfair preference or disposal of assets. Such appointments are not guaranteed.
As soon as the liquidator is appointed, they’ll take control of the business. They will:
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