What is a CL?

• A CL is a court-driven process, usually begun by a creditor issuing a winding up petition.

• The court has to be satisfied that the company against which the winding up petition has been issued is insolvent. 

• As soon as a winding up order is made, the Official Receiver, who is a civil servant, becomes Liquidator of the company.

• An independent Licensed Insolvency Practitioner may subsequently be appointed Liquidator by the Secretary of State if there are sufficient assets of the company to be realised.

• Alternatively, if a creditor of the company specifically wishes that a particular Licensed Insolvency Practitioner be appointed Liquidator, they can make this request to the Official Receiver who will call a creditors meeting.  The appointment will take effect if 50% of creditors in monetary value vote in favour.

What is the purpose of a CL?

• To appoint a Liquidator who has a duty to collect the company's assets and distribute them to creditors.

What are the duties of the Liquidator?

• The compulsory Liquidator’s duties are similar to those in a CVL.

• However, the Official Receiver remains responsible for investigating the company's affairs and submitting the report to the Secretary of State.

Options available if a petition has been presented against your company:

• Pay creditor who has issued the petition, if the debt is not disputed.

• Defend the petition

• Consider whether it is appropriate to ask your creditors to approve an alternative insolvency procedure (a Company Voluntary Arrangement, Administration or Creditors' Voluntary Liquidation).

• If you do nothing, the court will make a winding up order.

• NB:  Remember – each case is different.  It is therefore essential that you obtain professional advice as soon as you are made aware that a creditor is proposing to issue a winding up petition.