When a company does not have enough money to pay its debts, it may choose to voluntarily wind up, a process known as a creditors’ voluntary liquidation.
An insolvency practitioner can be appointed as liquidator of the company by its shareholders, with the aim of realising assets to pay creditors, as far as is possible.
A compulsory liquidation occurs when a court issues an order for an insolvent company to be wound up, following a petition submitted by an appropriate person, for example a creditor. This will often be a major creditor, such as HM Revenue & Customs.
If you have been issued with a winding-up petition, it is crucial to seek expert Insolvency advice. There may be time to reach an arrangement with your creditor, which could be through a company voluntary arrangement (CVA).
A CVA enables the company to pay creditors over a fixed period and, if the creditors agree to the arrangement,to continue trading.
Seeking early advice is the best way forward for any business facing financial difficulties and pressure from creditors.
To find out more about Compulsory liquidations, please contact us.
Why not follow us on social media to be kept up to date with our latest industry updates.