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Creditors' Compulsory Winding up Petition

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In the UK, creditors can seek to bankrupt a company through petitioning the court for a compulsory winding up order. The laws are very strict in this regards and it doesn't take much for a creditor to be able to seek a compulsory winding up petition against a business or individual that owes them money. In many cases a creditor (or two if in agreement) can file a petition to force bankruptcy if as little as £750 is due them. That would be the amount owed to one creditor, or the sum total owed to two or more if they are in agreement and petition the court jointly.

However, compulsory liquidation (compulsory winding up) can also be sought by the company itself or even a shareholder. As the laws are so specific in the UK, it is always advisable to seek the counsel of an Insolvency Practitioner or an Insolvency Solicitor before seeking compulsory winding up of a company. Keep in mind that the only way a creditor can seek to liquidate a company in the UK is through the compulsory winding up of a company that is court ordered and a specific procedure that must be followed.

First, the creditor must request a statutory demand requiring payment within a 21 day timeframe. The creditor can also issue and execution against goods that remain unsatisfied. At time of the court order, a receiver will be appointed by the court to act in the interim until the creditor/s can appoint a liquidator to act on their behalf. Most often it is the receiver who calls the meeting to appoint the liquidator. If none is chosen, he continues on with the compulsory liquidation. This is just a very broad and basic understanding of compulsory liquidation. Further information can be obtained through a debt rescue company, an Insolvency Practitioner or on the government Companies House website.


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