A statutory demand will be issued to discharge the debt. If no response is received within 21 days, winding up proceedings can be issued. The debtor must owe at least £750 for winding up to be an option.
To petition for compulsory liquidation there is a £280 court fee and a £1,600 petition deposit. You will also need to pay to advertise the petition and court hearing in the Gazette. Which court you apply to depends on the amount of ‘paid-up share capital’ the business has – you can find this information on the Companies House register.
If the petition is successful, the court will issue a winding-up order and put a liquidator in charge of winding-up the company. The liquidator will take control of the business to manage the sale of assets and settling existing disputes. Where the liquidation has been brought about by a petition, rather than by the directors’ choice, the liquidator will act in the interest of the creditors. The business’s assets are used to pay its debts and any money leftover will be split among shareholders.
You may not recover all of the money you are owed. This will depend upon the value of the assets available and the amount owed in debts to other creditors.
Please note that the government has implemented temporary changes to insolvency procedures to support businesses affected by Coronavirus COVID-19. From March 1st 2020, businesses cannot be put into administration by creditors. The wrongful trading provisions have also been suspended, so that businesses can continue trading, paying staff and suppliers, and purchasing goods even when insolvency is likely. The aim is to avoid unnecessary insolvency during this time, so that struggling businesses will have the opportunity to recover once the current situation has passed.