HOW TO WIND-UP YOUR OWN COMPANY
Voluntary Liquidation
A company can only be put into voluntary liquidation by its shareholders. The liquidator appointed must be an authorised insolvency practitioner. The liquidation begins from the time the resolution to wind-up is passed.
Members' voluntary liquidation
A members' voluntary liquidation can only take place if the company is solvent. The directors must make a formal declaration of solvency, which must:
Creditors' voluntary liquidation
If the majority of directors do not make a declaration of solvency, or the company is insolvent, the shareholders can still vote for a voluntary liquidation. This type of liquidation is called a creditors' voluntary liquidation. To vote for a voluntary liquidation, the shareholders must:
- hold a general meeting of the company; and
- pass a resolution for voluntary winding up (as for members' voluntary liquidation).
The company can nominate an authorised insolvency practitioner as liquidator. It must also call a meeting of creditors (usually on the same day as the shareholders' meeting) at which they receive details of its financial affairs. The creditors can nominate a liquidator and their nomination will usually override that of the shareholders, if different.
Compulsory Liquidation
The High Court can make a winding-up order on the application of a relevant person (see below). The application is known as the "winding-up petition".
Who can put a company in compulsory liquidation?
A petition for the winding up of a company is usually presented to the High Court by a creditor.
Less frequently, the company itself, its directors or a shareholder may petition, as (in some circumstances) may an administrative receiver, an administrator, a supervisor of a voluntary arrangement, the Department, the Financial Services Authority, the chief clerk (Crown Court), a clerk of petty sessions, or the Official Receiver. A winding-up petition can still be presented even if a company is already in administrative receivership or voluntary liquidation.
In what circumstances can a winding-up order be made?
A winding-up order can be made if the company:
- has decided that it should be wound up by the High Court;
- registered as a public limited company more than a year previously but has not yet been issued with a trading certificate;
- is an 'old' public company;
- has not begun trading within a year of its incorporation or has suspended its trading for a whole year;
- has less than two shareholders, unless it is a private company limited by shares or guarantee;
- cannot pay its debts;
- should be wound up because the Court forms the opinion that this would be just and equitable.
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.
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.
