Winding-Up

Winding-up (also known as liquidation) is the process by which a company's affairs are concluded, its assets realised, and the proceeds distributed to creditors before the company is dissolved. It may be compulsory (by court order following a winding-up petition) or voluntary (by resolution of the shareholders). The statutory framework is found in Parts IV and V of the Insolvency Act 1986.

In practice

A creditor owed more than the prescribed minimum (£750 under s.123(1)(a) IA 1986; temporary increases have applied) may present a winding-up petition, typically after serving a statutory demand that has gone unsatisfied for 21 days. The petition is advertised in The Gazette at least seven business days before the hearing. Winding-up is a powerful enforcement tool because the mere presentation of a petition can pressure a solvent company to pay, as it restricts the company's ability to deal with its assets and may trigger cross-default clauses.