Process of liquidating a company
Article 211 of the Companies Act (CAP113) sets out the circumstances under which the company may be liquidated by the Court.
An application for liquidation of the Court should specify which of the criteria of Article 211 is based upon: The criteria are: The key provisions of the legislation when a winding up decree is issued are the following: When a winding up decree is issued, it is customary to Order that the expenses are to be paid out of the company’s property and a copy of this Order must also be sent to the Company Registrar and Official Receiver.
In General lines, how can someone apply for the winding up of a Company by the Court?
When the liquidation of a Company is made through a Court Application, then a relevant Court Application must be submitted in Court which must be in drafted in a specified way, which is called a Petition, and must be submitted in the District Court of the District in which the registered office of the company existed at least six months preceding the date of the Court Petition.
The initiation of Liquidation proceedings vary depending on the type of liquidation your company is going through.
To get an ideal about the process of liquidation it is important to understand the different types of liquidation.
Company liquidation procedures will vary depending on the company’s situation, for example if the company is solvent or not, or has assets.
Liquidation procedures are different for different types of liquidation, for example Compulsory Liquidation, procedures are set in motion by the creditors the company owes money to, however in Members Voluntary Liquidation it is a choice by directors and shareholders whether to start Liquidation proceedings.
Creditors Voluntary Liquidation is often misunderstood, as people assume that creditors initiate this, however it is actually a process started by the directors when the company is insolvent and they need to pay off creditors.
The company has to prove to the Court that they are not insolvent and are not trying to avoid paying creditors.
Compulsory liquidation procedures are usually started by creditors who are owed at least £750, it can be a petition to the high court or a district registrar and local court.
There are a few different options for Liquidation but essentially it comes down to 2 main types of Liquidation, these are: Members Voluntary Liquidation is when the directors and shareholders petition to liquidate the company.
If a company is solvent but still wants to wind up then a Members Voluntary Liquidation (MVL) can be petitioned.