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ARTICLE · 29 MAY 2024

Understanding Compulsory Liquidation: A Guide For Creditors

iLaw
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f a UK company owes you or your organisation money, you might be considering your options for recovering the debt.

United KingdomCorporate/Commercial Law
Aubrey Wood
Aubrey Wood
Jenny Lau
Jenny Lau

If a UK company owes you or your organisation money, you might be considering your options for recovering the debt. One effective method is applying for compulsory liquidation, also known as 'winding up' the company. This process can be faster than traditional debt recovery claims, potentially taking as little as 7–12 weeks. However, there are important details you should understand before starting this process.

Is the Company Insolvent?

The company's insolvency is a requirement for the court to accept a winding-up petition. The Insolvency Act 1986 (the "Act") states that insolvency is established if the company's assets are not sufficient to cover its debts and liabilities.

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