Compulsory liquidation
Compulsory liquidation

The following Property guidance note provides comprehensive and up to date legal information covering:

  • Compulsory liquidation
  • General
  • Petition
  • Effect of a winding-up order
  • Decisions
  • Powers and duties
  • Remuneration and financial matters
  • Resignation and discharge
  • Distribution
  • Adjustment of prior transactions
  • more


Liquidation (sometimes called winding up) is the process by which a company and its affairs are brought to an end and its assets distributed to creditors and members as prescribed by law. It is governed by:

  1. the Insolvency Act 1986 (IA 1986)

  2. the Insolvency (England and Wales) Rules 2016 (IR 2016), SI 2016/1024

Liquidation of companies incorporated in England and Wales is subject to the jurisdiction of:

  1. the Chancery Division of the High Court, or

  2. where the company has a paid-up share capital not exceeding £120,000, designated county courts

Liquidation is supervised by:

  1. the Official Receiver, or

  2. a liquidator, who must be a qualified insolvency practitioner. In this case the company must have enough assets to pay the liquidator's fees

Liquidation may be:

  1. voluntary—where initiated by resolution of the company's members

  2. compulsory—where the company is wound up by the court

This Practice Note deals only with compulsory liquidation.


Compulsory liquidation is where the court makes a winding-up order on petition. A petition may be presented by:

  1. the company or the directors

  2. a liquidator in voluntary winding up, an administrator, administrative receiver, or the supervisor of a CVA, or

  3. a creditor, although an order will not be granted where a debt is genuinely disputed on substantial grounds. This includes a contingent creditor

In Sushinho, on an application for costs, a tenant,