Editing Liquidation (section)

==Compulsory liquidation==
The parties which are entitled by law to [[petition]] for the compulsory liquidation of a company vary from [[jurisdiction]] to jurisdiction, but generally, a petition may be lodged with the court for the compulsory liquidation of a company by:

* The company itself
* Any [[creditor]] which establishes a ''[[prima facie]]'' case
* Contributories: Those shareholders be required to contribute to the company's [[asset]]s on liquidation<ref>{{cite web |title=Insolvency Act 1986: Section 74 |url=http://www.legislation.gov.uk/ukpga/1986/45/section/74 |website=legislation.gov.uk |publisher=Crown |access-date=30 July 2014 |archive-date=8 August 2014 |archive-url=https://web.archive.org/web/20140808032930/http://www.legislation.gov.uk/ukpga/1986/45/section/74 |url-status=live }}</ref><ref>{{cite web |title=Insolvency Act 1986: Section 75 |url=http://www.legislation.gov.uk/ukpga/1986/45/section/75 |website=legislation.gov.uk |publisher=Crown |access-date=30 July 2014 |archive-date=8 August 2014 |archive-url=https://web.archive.org/web/20140808032944/http://www.legislation.gov.uk/ukpga/1986/45/section/75 |url-status=live }}</ref>
* A [[Minister (government)|government minister]], usually the one responsible for competition and business
* An [[official receiver]]

===Grounds===
The grounds upon which an entity can apply to the court for an order of compulsory liquidation also vary between [[jurisdictions]], but usually include:

* The company has so resolved
* The company was incorporated as a [[corporation]], and has not been issued with a trading certificate (or equivalent) within 12 months of registration
* It is an "old [[public company]]" (i.e. one that has not re-registered as a public company or become a private company under more recent companies legislation requiring this)
* It has not commenced business within the statutorily prescribed time (normally one year) of its incorporation, or has not carried on business for a statutorily prescribed amount of time
* The number of members has fallen below the minimum prescribed by statute
* The company is unable to pay its debts as they fall due
* It is just and equitable to wind up the company, as for an example specified by an insolvency act<ref>{{cite web |title=Insolvency Act 1986: Section 122 |url=http://www.legislation.gov.uk/ukpga/1986/45/section/122 |website=legislation.gov.uk |publisher=Crown |access-date=30 July 2014 |archive-date=8 August 2014 |archive-url=https://web.archive.org/web/20140808032928/http://www.legislation.gov.uk/ukpga/1986/45/section/122 |url-status=live }}</ref>

In practice, the vast majority of compulsory winding-up applications are made under one of the last two grounds.<ref>{{cite web |last=Jefferson |first=Mark |title=What is a Winding-Up Order |url=http://www.businessrecovery.co.uk/help-centre/terminology-explained/what-is-a-winding-up-order/ |work=Business Recovery |access-date=16 December 2013 |archive-date=16 December 2013 |archive-url=https://web.archive.org/web/20131216190511/http://www.businessrecovery.co.uk/help-centre/terminology-explained/what-is-a-winding-up-order/ |url-status=live }}</ref>

An order will not generally be made if the purpose of the application is to enforce payment of a debt which is ''bona fide'' disputed.<ref>See ''Stonegate Securities Ltd v Gregory'' [1980] Ch 576, per Buckley L.J. at 579.</ref>

A "just and equitable" winding-up enables the grounds to subject the strict legal rights of the shareholders to equitable considerations. It can take account of personal relationships of mutual trust and confidence in small parties, particularly, for example, where there is a breach of an understanding that all of the members may participate in the business,<ref>''Ebrahimi v Westbourne Galleries'' [1972] 2 AER 492.</ref> or of an implied obligation to participate in management.<ref>''Tay Bok Choon v Tahansan Sdn Bhd'' [1987] BCLC 472.</ref> An order might be made where the majority shareholders deprive the minority of their right to appoint and remove their own director.<ref>''Re A & BC Chewing Gum Ltd'' [1975] 1 WLR 579.</ref>

===The order===
Once liquidation commences (which depends upon applicable law, but will generally be when the petition was originally presented, and not when the court makes the order),<ref>{{cite web |title=Insolvency Act 1986: Section 129 |url=http://www.legislation.gov.uk/ukpga/1986/45/section/129 |website=legislation.gov.uk |publisher=Crown |access-date=30 July 2014 |archive-date=8 August 2014 |archive-url=https://web.archive.org/web/20140808032938/http://www.legislation.gov.uk/ukpga/1986/45/section/129 |url-status=live }}</ref> dispositions of the company's generally [[void (law)|void]],<ref>{{cite web |title=Insolvency Act 1986: Section 127 |url=http://www.legislation.gov.uk/ukpga/1986/45/section/127 |website=legislation.gov.uk |publisher=Crown |access-date=30 July 2014 |archive-date=8 August 2014 |archive-url=https://web.archive.org/web/20140808032926/http://www.legislation.gov.uk/ukpga/1986/45/section/127 |url-status=live }}</ref> and [[litigation]] involving the company is generally restrained.<ref>{{cite web |title=Insolvency Act 1986: Section 130 |url=http://www.legislation.gov.uk/ukpga/1986/45/section/130 |website=legislation.gov.uk |publisher=Crown |access-date=30 July 2014 |archive-date=8 August 2014 |archive-url=https://web.archive.org/web/20140808031415/http://www.legislation.gov.uk/ukpga/1986/45/section/130 |url-status=live }}</ref>

Upon hearing the application, the court may either dismiss the petition or make the order for winding-up. The court may dismiss the application if the petitioner unreasonably refrains from an alternative course of action.<ref>''Re A Company (No 001573 of 1983)'' [1983] Com LR 202.</ref>

The court may appoint an official receiver, and one or more [[liquidator (law)|liquidators]], and has general powers to enable rights and liabilities of claimants and contributories to be settled. Separate meetings of creditors and contributories may decide to nominate a person for the appointment of a liquidator and possibly of a supervisory liquidation committee.

===Administrative receiver===

The person appointed by the holder of a floating charge debenture over a company's assets to collect in and realise the assets of that company and to repay the indebtedness to the debenture holder. <ref>{{cite web |title=Definitions of Insolvency and Bankruptcy Terms and Expressions for England and Wales |url=https://gaukauctions.com/post/2018/5/23/glossary-of-insolvency-terms |website=gaukauctions.com |date=23 May 2018 |publisher=GAUK Media |access-date=13 May 2020 |archive-date=3 August 2020 |archive-url=https://web.archive.org/web/20200803064312/https://gaukauctions.com/post/2018/5/23/glossary-of-insolvency-terms |url-status=live }}</ref> Administrative receivers can no longer be appointed by floating charge holders with the exception of floating charges created prior to 15 September 2003.<ref>{{Cite web |title=A guide to administrative receiverships {{!}} The Gazette |url=https://www.thegazette.co.uk/all-notices/content/103878 |access-date=2023-10-18 |website=www.thegazette.co.uk}}</ref><ref>{{Cite web |title=Practice guide 36: administration and receivership |url=https://www.gov.uk/government/publications/administration-and-receivership/practice-guide-36-administration-and-receivership |access-date=2023-10-18 |website=GOV.UK |language=en}}</ref>