Compulsory liquidation

In this lesson

1. 0:00 Compulsory liquidation and court orders
2. 0:22 Grounds for winding up a company
3. 1:13 Just and equitable grounds explained
4. 2:19 Who can apply for compulsory liquidation
5. 3:10 Effects of a compulsory winding up order
6. 4:22 Director duties and liquidator responsibilities

About this lesson

Compulsory liquidation is a court-ordered process that can be initiated when a company owes at least £750 in debt and hasn't paid after a final written demand, or on other grounds such as failure to trade within a year of incorporation or just and equitable reasons. Understanding the grounds for compulsory winding up is essential for Corporate and Business Law (LW) and helps you grasp how the legal system protects creditors and enforces company accountability. We walk through who can apply for compulsory liquidation—creditors, the official receiver, the company itself, the government, or members (if solvent)—and explore a real case study showing how deadlocked shareholders can use this mechanism when they can't agree to dissolve the company voluntarily. You'll see how the process works in practice: liquidation commences when the court application is presented, an official receiver takes control as liquidator, floating charges crystallise into fixed charges, and all director powers cease immediately. The lesson also covers the key effects and consequences: employees are made redundant, directors must provide a statement of affairs within 21 days, and the liquidator investigates the causes of failure to determine whether directors should face disqualification, wrongful trading claims, or fraudulent trading allegations. This knowledge is critical for understanding company law and the safeguards built into insolvency law.

Duration: 5m