HOW TO WIND-UP A COMPANY THAT OWES YOU MONEY
How do I prove to the High Court that the company who owes me money cannot pay its debts?
The High Court will regard a company as being unable to pay its debts if any of the following occur:
- A creditor who is owed more than £750 serves a 'statutory demand' (Form 4.01) for the money due and it is not paid or secured, or a settlement is not agreed, within 21 days. You can download the form for a statutory demand from the forms section of this website. The completed form must be served on the company at its registered office. The creditor must have proof of service, so it is usual to employ a process server (these are listed in Yellow Pages under 'detective agencies'). The High Court is not involved in issuing statutory demands, so no court fee is payable. However, the company can dispute the statutory demand and apply to the High Court for the statutory demand to be set aside or to restrain the petition (ie stop a winding-up petition from being presented).
- A creditor obtains judgment against the company, it is lodged for enforcement with the Enforcement of Judgments Office at Bedford House, Bedford Street, Belfast, and a certificate of unenforceability is issued under Article 19 of the Judgments Enforcement (Northern Ireland) Order 1981.
- It is proved to the High Court that the company cannot pay its debts when they fall due, eg no payment in response to a letter of demand.
- It is proved to the High Court that the company's total debts exceed its total assets.
How do I put a company into compulsory liquidation?
If a company owes you money, you can only wind it up by presenting a petition to the High Court for the company to be wound up (compulsory winding up).
Compulsory winding up (compulsory liquidation) is when the High Court makes an order for the company to be wound up ('a winding-up order') on the petition of an appropriate person, usually a creditor. A winding-up petition is usually presented by a creditor on the grounds that the company cannot pay its debts, and this has to be proved in the Court.
In which Court should a winding-up petition be presented?
The winding-up petition should be presented in the Northern Ireland High Court, Royal Courts of Justice, Chichester Street, Belfast.
The telephone number is 028 90235111 and you should ask to be put through to the Bankruptcy and Chancery Office.
What is the procedure for presenting a winding-up petition?
To ensure that all legal requirements are met, it is usual to instruct a solicitor to deal with issuing a winding-up petition.
What are the costs of putting the company into compulsory liquidation?
The fees you will have to pay are:
- Petition deposit of £690 towards the costs of administration of the liquidation.
- A court fee of £150
- The costs involved in advertising the petition in the Belfast Gazette, using a process server for the service of a statutory demand and the petition, etc.
- Any costs for instructing a solicitor.
Can anyone appeal against or stop a winding-up order?
There are three ways that winding-up proceedings can be stopped:
- The Court can rescind (ie cancel) a winding-up order. The company (or anyone else) can apply for it to be rescinded if the Court did not have all the relevant facts when making the winding-up order. Application should be made within 7 days of the order being made.
- The company can appeal against a winding-up order. As a result of an appeal, the Court can rescind the winding-up order or otherwise vary its decision. An appeal should be made within 4 weeks of the order being made.
- Liquidation proceedings can be 'stayed' (ie stopped), permanently or temporarily, on the application of the liquidator, the Official Receiver, a creditor or a shareholder. If liquidation proceedings are stayed permanently, the directors usually regain control of the company. An application to stay the liquidation proceedings can be made at any time after a winding-up order has been made.
What happens after a company goes into compulsory liquidation?
Usually, the Official Receiver (who is both a civil servant in The Insolvency Service and an officer of the High Court) will be appointed liquidator of the company on the making of a winding-up order.
The Official Receiver has a duty:
- as Official Receiver
- to ensure that notice of the winding-up order is advertised in the Belfast Gazette and in a local newspaper; and
- to investigate the affairs of the company and to establish the cause of its failure (by obtaining information from the directors of the company and from third parties, such as the company's bankers, accountants and solicitors);
- as liquidator - to collect and realise all assets and pay all creditors.
The Official Receiver may call a meeting of creditors to appoint an insolvency practitioner as liquidator in his place, but if this happens he still has a duty to investigate the company's affairs.
So, 2 people may be involved in the liquidation:
- the liquidator, who is responsible for collecting and realising the assets and paying the creditors; and
- the Official Receiver, who investigates the company's affairs.
The Official Receiver also has a duty to make a report to the Department, under the Company Directors Disqualification (Northern Ireland) Order 2002, regarding the conduct of the company's directors.
What are the duties of a company director in compulsory liquidation proceedings?
In compulsory liquidation proceedings, the company's directors must:
- provide information about the company's affairs to the Official Receiver, probably initially over the telephone, but later at a formal interview at the Official Receiver's office.
- provide information about the company's affairs to any insolvency practitioner who is appointed liquidator of the company, and attend for interview when reasonably required; and
- look after and hand over the company's assets to the liquidator or Official Receiver, together with all its books, records, bank statements, insurance policies and other papers relating to its assets and debts.
When will compulsory liquidation end?
How long liquidation takes depends on the circumstances of the individual case (eg the nature of the assets involved and the complexity of the liquidation), but once the process has been completed the company will be dissolved and cease to exist.
