What happens after a Winding Up Order is granted?

What is a Winding Up Order?

A Winding Up Order is an instruction from the court to close a company via the Compulsory Liquidation process and remove it from the official register at Companies House. The court will issue a Winding Up Order if it believes the company cannot afford to pay its debts and it’s in the public interest to close it down. 

The process is usually initiated by a large creditor such as HMRC or a bank after it has made multiple attempts to recover a debt. Once a Winding-up Order has been granted, the company’s assets will be sold and the proceeds will be used to repay its creditors as much as possible. Any remaining debts it cannot repay will be written off, and the company will be struck from the register and cease to exist.

What is the Winding Up Order process?

These are the steps involved in the Winding Up Order process:

• A creditor issues a company with a Statutory Demand or County Court Judgment (CCJ) for an outstanding debt
• If the company doesn’t pay the debt, the creditor can issue a Winding Up Petition
• The court will hear the petition and decide whether to make a Winding Up Order
• If the court grants a Winding Up Order, the Compulsory Liquidation process begins
• The court will appoint an Official Receiver to administer the liquidation
• The Official Receiver or an independent liquidator will wind down the company’s affairs, sell its assets and distribute the proceeds among the creditors in a strict order
• Finally, the liquidator will strike the company off the official register at Companies House and it will no longer legally exist

“After submitting my '60 Second Test' I received a complimentary Insolvency Options guide packed full of useful information. The team of insolvency specialists phoned me back in less than 10 minutes after reviewing my details and guided me through the next steps. Really helpful! Thank you Sophie!”

Patricia 

 

Contact the Real Business Rescue Team today

Sophie Schofield
Business Debt Expert

What happens after a Winding Up Order is granted?

Once a Winding Up Order has been granted, the court will appoint an Official Receiver (OR) to handle the initial proceedings. If the company has valuable assets, the OR will usually ask an independent Insolvency Practitioner to administer the liquidation on the court’s behalf. If there are few assets, the OR may oversee the liquidation themselves.  

Once the Winding Up Order has been made, the directors lose control over the business and anything it owns. That passes to the liquidator, who will start closing the company. 

Their first job is to advertise the Winding Up Order in The Gazette and forward a copy to the Registrar of Companies. They will settle any ongoing disputes, identify, value and sell the business’s assets, invite claims from creditors and deal with any other issues. They will also collect money the company is owed and call in overdrawn director’s loan accounts. They will then distribute the funds they raise among the creditors before applying to dissolve the business. 

As part of their role, the OR will also investigate the cause of the company’s failure and the conduct of the directors. If evidence of misconduct is found, it could lead to serious repercussions, including director disqualification and personal liability issues.

Get a Quote Find Your Nearest Office

What are the duties of directors after a Winding Up Order is granted?

Once a Winding Up Order has been made, you can apply to cancel or stay the order if there has been a mistake or you could pay the debt if you had more time. Once the proceedings begin, you will lose control of the company but must still assist the liquidator where necessary. You are required to: 

• Hand over information about the business’s finances and affairs, such as company books and records, management accounts and insurance policies
• Preserve the company’s assets and pass their details to the liquidator
• Complete a questionnaire and attend a face-to-face interview with the liquidator 

You may also be required to assist the liquidator in disposing of the company’s assets. You could face legal repercussions if you refuse to cooperate with their requests. 

Need advice?

If your company has been threatened with a Winding Up Petition or received a Statutory Demand from a creditor, you should seek professional advice immediately. You can contact our team for a free consultation or arrange a meeting at one of our UK offices. We will discuss your circumstances, explain your options and guide you on the most appropriate route forward.