Compulsory Liquidation Hurts Like Hell

Compulsory Liquidation Hurts Like Hell when a director is unprepared.  There are a few ways that a director ends up with the company going into compulsory liquidation. None of them are particularly nice!

Russian Roulette with 6 bullets

The first is often by ignorance when a director issues a winding up petition against his own company. This is often an own goal.  In instances where there are no creditors the alternative would have been to simply dissolve the company for the fee of £10.

Financial suicide to boost ego

The second is when there’s a disagreement between two directors and one of the directors issues a winding up petition. Again, this is not a wise move as it is financial suicide.   Arbitration should have been the preferred path.

Outgunned by a creditor

The third is when a winding up petition is issued by a creditor against the company. The directors fail to settle the winding up petition and to the result is the company enters into compulsory liquidation.

My name is Receiver, Official Receiver.

So these are just a few ways that a director can end up making the acquaintance of an Official Receiver. A few duties of an Official Receiver are to collect in as much money possible for the creditors and to investigate how the well, or not, the directors have run the company.

A compulsory liquidation hurts like Hell when the Official Receiver digs into the company’s paperwork. This is because of the director’s expense claims and loan accounts are analysed down to the last penny. This often leads to a surprising personal claim against the director. In some cases  the Official Receiver could take Court Action against the director or arrange to serve the director with a lengthy director ban.

So before you decide to throw your hands in the air to face the consequences of ignoring a winding up petition – talk to Directors Circle on 0333 050 8518.