5.1 Compulsory liq

Question 1

In which court must a winding up petition be presented?

Answer 1

 HighCourtforanycompany
 High Court must be used if registered office is in London

 Or if outside London, the County Court, provided both
 share capital less than £120,000 and
 registered office in bankruptcy district

Question 2

What are the main grounds for court to wind up a company?

Answer 2

S122(1)(a) Company has passed special resolution to be wound up by court

 S122(1)(f)&S123 It is unable to pay its debts as and when they fall due

 S122(1)(g) Court of opinion it is just and equitable

 S124A In the public interest

Question 3

What is the s123 definition of unable to pay its debts?

Answer 3

 Within 3 weeks company has not settled a statutory demand for a minimum of £750

 Execution of judgement returned unsatisfied

 Court satisfied company unable to pay debts as and when they fall due

 Liabilities exceed assets (taking into account contingent and prospective liabilities)

Question 4

How many days to comply with a stat demand?

Answer 4

21 days (to pay, secure or compound to creditor’s satisfaction)

Question 5

Can a stat demand be set aside?

Answer 5

No process to set aside

 Company would need to restrain creditor by injunction

Question 6

How long before petition is verified by a statement of truth must it be made out?

Answer 6

No longer than 10 days earlier

Question 7

What are the court fees to wind up a company?

Answer 7

Court fee: £302
OR Deposit: £2,600

Question 8

Where is a petition served if no registered office?

Answer 8

Last principle place of business, failing which substituted service may be requested

Question 9

What is the effect of a winding up petition?

Answer 9

Any other legal proceedings can be stayed, sisted or restrained
 i.e. put on hold

 Attachments obtained post-petition are void
 Post-petition dispositions void
 Petitions are advertised in the London Gazette

Question 10

When is a company wu petition gazetted?

Answer 10

 Not less than 7 days after service
 Minimum of 7 days prior to hearing

Notice includes notice of requirement to give notice if wishing to appear at the hearing

Question 11

What is the position if any other party wishes to appear at the hearing?

Answer 11

Creditors/ contributories wishing to appear must give notice to the petitioner
 4pm on business day prior
 Notice must state whether supporting or opposing
 Details of debt or shares held

Question 12

When can the petitioner be substituted?

Answer 12

 An order for substitution may be made where the original petitioner:
 Is found not to be entitled to petition
 Has failed to give notice of the petition
 Consents to withdraw, dismiss or adjourn the petition, or fails to appear
 Appears but fails to seek an order

Question 13

What can directors do if they wish to oppose a WU petition?

Answer 13

 Injunction to restrain presentation of a petition  Injunction to restrain advertising in the gazette

 To oppose the petition, the company must serve notice of their intention to do so 5 BUSINESS DAYS before hearing

Question 14

Who can apply for the appointment of a provisional liquidator?

Answer 14

Any party qualified to present petition for winding up
 Notice to the company may be dispensed with where there is a serious risk to assets
 Applicant must show sufficient grounds

Powers determined by Court and stated in the court order
 To the exclusion of the directors

Question 15

Where a Provisional liquidator has been appointed, to whom do they need to give notice/

Answer 15

Court notifies OR/ PL

AS SOON AS REASONABLY PRACTICAL after receipt of copy order of appointment, give notice of appointment unless court otherwise directs
 Registrar of Companies
 Company or any CVL Liquidator

Gazette plus further as thinks fit.

Question 16

When can a statement of affairs be requested?

Answer 16

Once PL appointed, Official Receiver can request a Statement of Affairs

Question 17

Who fixes the provisional liquidator’s remuneration?

Answer 17

The court

Remuneration and expenses paid
 if company wound up, as expense of liquidation
 if not wound up, out of company assets

 PL may retain assets/ funds to pay remuneration and expenses if company not wound up

Question 18

When is a PL’s appointment terminated

Answer 18

Dismissal of petition
WUO
Order by court to terminate/ remove

Application can be made to Court for removal by any party that could have applied for appointment
PL must give notice of termination ASARP to same parties notified of appointment and advertise in gazette

Question 19

what are the consequences of WUO?

Answer 19

a copy of the order must FORTHWITH be forwarded to the registrar of companies (by OR)

 no action or proceeding shall be proceeded with or commenced against the company or its property, except by leave of the court and subject to such terms as the court may impose

Question 20

What date is the commencement of a compulsory WUO?

Answer 20

 time of presentation of petition,
 or date of winding up resolution (if resolution passed before the petition),
 or date of winding up order (where court makes winding up order following presentation of petition for administration)

Question 21

How long does the OR have to report to creditors?

Answer 21

No statutory time scale/ OR manual aims for within 8 weeks

Question 22

In a Compulsory liquidation how long does a director have to produce an SA, if required

Answer 22

21 days (unlike 11 days else where)

Question 23

Statement of concurrence

Answer 23

OR must inform director requested to produce SoA that relevant person asked to concur

 The director preparing SoA must then copy it to concurring parties
 Has 5 business days to deliver SoC from day on which receives SoA

Question 24

What is the position re expenses to complete an SA in a Comp liq?

Answer 24

 Person required to submit SoA or SoC can apply to OR for authority to get help to prepare
 Estimate of costs must be provided
 OR can impose conditions as to access to documents
 Any allowance agreed by OR is an expense of liquidation

Question 25

When can the OR apply for public examination?

Answer 25

OR may at any time before the dissolution of the company

They must do so if requested by
 one-half, in value, of the company’s creditors; or
 three -quarters, in value, of the company’s contributories

Question 26

Who can take part and ask questions at a public examination?

Answer 26

 the official receiver
 the liquidator of the company
 any person who has been appointed as special manager of the company’s property or business
 any creditor of the company who has tendered a proof of debt
 any contributory of the company

Question 27

How long does the OR have to decide whether they intend to continue to act as liquidator?

Answer 27

12 weeks, with decision procedure within 4 MONTHS of appointment

Question 28

What are the OR’s fees?

Answer 28

The Insolvency Proceedings (Fees) Order 2016, Schedule 1

OR’s administration fee:
 Public Interest grounds £7,500
 All other grounds £5,000

OR’s general fee £6,000

ie 13,500 PI winder, otherwise £11,000

 OR’s fee for acting as liquidator: 15% of receipts

Question 29

When can creditors requisition a meeting to appoint an alternative liquidator?

Answer 29

May be requisitioned by 25% of creditors in value

 Where creditors requisition a decision, decisions of both creditors and contributories must be obtained

Requisitioning creditor is responsible for paying the expenses of obtaining the decision and must deposit funds with the official receiver

 Decisions should be held WITHIN 3 MONTHS of the receipt of the request, or of the payment of the estimated costs, whichever is later

 May be by Qualifying Decision Procedure or by Deemed Consent

Question 30

How does appointment of replacement liquidator take effect?

Answer 30

 Simple majority of votes required: 50%

 Appointment takes effect when certified by the chair of the decision procedure

 Annual reporting date will run to date of appointment of 1st liquidator i.e. the OR

Question 31

When can the court appoint a liquidator?

Answer 31

 Where a winding -up order is made immediately upon the appointment of an administrator ceasing to have effect or at a time where there is a supervisor of a CVA in office, the court may appoint that person as liquidator.

 OR does not become liquidator

*Liquidator has responsibility for gazette and CH notifications