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Can Company Administration Stop Liquidation?

Licensed UK Insolvency Practitioners FREE Meeting for Company Directors

We can help with serious company debts, HMRC and creditor pressure, VAT/PAYE/Tax arrears, cashflow problems and raising finance.

Can Company Administration Stop Liquidation?

We’ve been unable to pay one of our creditors for the past couple months and now they are claiming that they will wind up our company if we do not pay by the next due date. We’ve heard that company administration can halt any legal actions taken against a company. Does this mean it could stop liquidation? What can be done once a creditor decides to pursue a compulsory liquidation?


Answer

Whether or not liquidation can be stopped depends on a number of factors. First, has your company violated the terms of a loan agreement that is secured by a fixed or floating charge? If so the creditor may already have the express right to appoint an administrator or receiver. Does your company owe a debt of more than £750 repayment of which has been demanded? If so, the creditor has all they need to wind up your company through compulsory liquidation. Has your company received a winding up petition yet? The creditor can advertise that petition within 7 days of sending it to your office, at which point your bank accounts could be frozen by the courts, marking the official beginning of the liquidation process.

The good news is, if you have not yet received the winding up petition, or you’ve received it within the past 7 days, you may still be able to put the company into administration voluntarily. This would effectively halt any legal action being taken against the business throughout the administration process, so the threat of receivership or liquidation would no longer be an issue for the time being.


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Andrew MacKenzie
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