Petition for the Appointment of a Liquidator

A creditor, who is owed more than £750 (England) or £1,500 (Scotland), once they have established apparent insolvency, can petition the court for the appointment of a Liquidator. This is also called a ‘winding up’ petition. If successful, the company will stop doing business and employing people. When you liquidate a company, its assets are used to pay off its debts, but in terms of a prescribed ranking. As most creditors are unsecured, they are last to be paid and quite often receive little or no dividend.

The liquidator acts in the interest of the creditors not the directors.

Obtaining apparent insolvency in England is done by providing evidence to the court that you’re owed this money by the company and the sums due can not be paid

Evidence can be either:

  • a certificate of personal service or substituted service to confirm that you gave a statutory demand (a request for payment) to the company.
  • a bailiff’s statement showing that the bailiff couldn’t recover enough assets to pay the debt (in cases where you got a court judgment.

In Scotland apparent insolvency is obtained on expiry of;

  • A Charge of Payment of Money
  • Shortened Demand
  • Statutory Demand

In England the Petition is lodged together with court fees and a petition deposit.

In Scotland the winding-up petition goes to:

  • the relevant Sheriff Court (provided the company's share capital does not exceed £120,000 and the company's registered office has been in the Sheriff Court's jurisdiction for the majority of the previous 12 months).
  • the Court of Session (provided the company's share capital exceeds £120,000).

In all cases the petition must be served on the company at their registered office and advertised in the Gazette and newspapers, as directed by the court. The debtor company may lodge answers and try to defend the petition, including claiming the sums are not due.

Creditor may seek the appointment of an interim liquidator, or a provisional liquidator but may have to show there is a risk of flight, unfair preference or disposal of assets. Such appointments are not guaranteed.

As soon as the liquidator is appointed, they’ll take control of the business. They will:

  • settle any legal disputes or outstanding contracts.
  • sell off the company’s assets and use any money to pay creditors.
  • recovery monies due to the company.
  • meet deadlines for paperwork and keep authorities informed.
  • pay liquidation costs and the final VAT bill.
  • bring together people owed money (creditors) and hold meetings where necessary.
  • decide which creditors should be paid first in terms of rankings.
  • interview the directors and report on what went wrong in the business.
  • get the company removed from the companies register.

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