This is the winding up of a company or a partnership by a court order (a winding up order). A petition is normally presented to the court by a creditor stating that he or she is owed a sum of money by the company and that the company cannot pay.

The Official Receiver becomes liquidator when the order is made but an Insolvency Practitioner will be appointed to take over if the company has significant assets. The liquidator's role is to realise the company's assets, pay all the fees and charges arising from the liquidation, and pay the creditors as far as funds allow in a strict order of priority.

How can I liquidate a company?

If you are owed more than £750.00 by a limited company and they have refused/neglected to pay you can apply to liquidate the company by presenting a petition to court.

Your petition will be based on the fact that the company cannot pay its debts and you will have to prove this with evidence in court.

What is liquidation?

Liquidation of a company is a legal process where a liquidator is appointed by Order of the Court to "wind-up" the affairs of a limited company.

Winding-up a company does not mean that a creditor will get paid. The process only ensures a company's affairs have all been dealt with correctly.

All contracts are brought to an end or transferred to another party, this includes employee contracts
The company's business ceases
Assets are sold
Debts owed to the company are collected
If funds are left they are distributed to creditors

The liquidator then applies to have the company removed from the register held at Companies House and dissolved, meaning the company no longer exists.

What can I use to prove that a company cannot pay its debts?

Courts will accept the following evidence:

The creditor has served a statutory demand (Form 4.1) requesting the money owed and the money is not paid or secured, or settlement could not be agreed within 21 days. The completed form has to be served on the company at its registered office. It is usual to use a process server to do and provide your evidence, or

The creditor obtains judgment against the company and the Enforcement Agent (Bailiff) or High Court Enforcement Officer is unable to take control of enough goods to clear the debt, or

It is proved to the court that the company's total debts exceed its total assets ie the company is insolvent.

Which courts deal with winding-up petitions?

The High Court London or any District Registry of the High Court

The High Court
Royal Courts of Justice
Companies Court
Tel 020 7947 6294/6516

Birmingham District Registry
Bristol District Registry
Cardiff District Registry
Leeds District Registry
Liverpool District Registry
Newcastle-upon-Tyne District Registry
Preston District Registry

Some County Courts can be served with a petition if they deal with insolvency matters, the company's trading address or registered office falls within their area and the paid-up share capital of the company is £120,000 or less.

How much does it cost to file a liquidation petition?

The cost is made up of the court fee to issue the petition of £220.00 plus the official receiver's deposit of £1165.00. In total £1385.00.

In addition you should add process server fees, these are offered on a fixed-fee basis of £80.00 to £100.00.

Do I need to use a solicitor?

Most claimants instruct a solicitor to deal with issuing a liquidation petition.

The winding-up process is not simply a matter of completing a petition and presenting it to the court. Unlike the small claims track of the County Court a court hearing can result in costs being awarded against either party. Costs may be awarded against you if the court believes you have used the winding-up procedure inappropriately.

What happens after a petition is served?

Immediately after the process server has served your petition you must file a certificate of service with the Court (Form 4.4 if you have served at the company's Registered Office, or Form 4.5 if you were not able to serve the petition at the Registered Office).

A statement of truth must state how you serve the petition and if you were not able to serve at the Registered Office you have to explain why.

A copy of the petition needs to be attached to the statement of truth

You must advertise your petition in the London Gazette ( no sooner than 7 business days after the petition was served and no later than 7 business days before the winding-up hearing.

You must file a certificate of compliance (Form 4.7) with the court at least 5 business days before the hearing. To this you must attach a copy of the full page of the London Gazette containing your advertisement.

You must file the list of persons intending to appear at the hearing (Form 4.10) with the court by 1630 hours on the day before the hearing.