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Insolvency

Compulsory liquidation

Grounds for winding-up: s122 IA 1986

A compulsory winding up commences when a petition for a winding up
order is presented to the court. The court then passes an order that the
company is to be wound-up.

The possible grounds for the petition are set out in s122 Insolvency Act
1986. The main ones of these are:

 A public company has not been issued with a trading certificate
within a year of incorporation and a petition has been.

 The company is unable to pay its debts. A company is deemed to
be unable to pay its debts where a creditor who is owed at least
£750 has served a written demand for payment and the company
has failed to pay the sum due within three weeks.

 It is just and equitable to wind up the company. However, the
court will only make an order under this ground if no other remedy
is available.

Petitioners

The following persons may petition the court for a compulsory liquidation:

 The BIS

 A member (to claim for just and equitable winding-up they must have been a
registered shareholder for at least six of the last 18 months)

 A creditor who is owed at least £750.

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