Compulsory liquidation

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Compulsory liquidation is the process of winding-up a company by the court. It is most frequently used by a company’s creditors, but it is possible for others—such as the company itself, or members—to also use this process. It is an alternative to voluntary liquidation (both creditors’ voluntary liquidation (CVL) and members’ voluntary liquidation).

The circumstances in which a company can be wound up by the court

By a company’s creditors

A winding-up petition is most commonly issued by a creditor who is owed money and is unable to recover it through the usual debt recovery methods. A creditor may issue a petition on the following grounds:

  1. •

    they have served a statutory demand and the 21-day period for payment/response has expired

  2. •

    they have an enforcement or execution process following a judgment, which is unsatisfied, either in full or in part, or

  3. •

    they are able to prove to the court that the company is unable to pay its debts as and when they fall due, or that the company is balance sheet insolvent—as per the definition of insolvency under the section 123 of the Insolvency Act 1986 ( To view the latest version of this document and thousands of others like it, sign-in with LexisNexis or register for a free trial.

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Latest Restructuring & Insolvency News

Supreme Court delivers judgment on dishonest assistance liability in breach of fiduciary duties case (Stevens v Hotel Portfolio II UK Ltd (in liquidation) and another)

The Supreme Court has allowed an appeal by a majority (Lord Burrows dissenting) affirming that a defendant is liable in dishonest assistance for assisting a fiduciary who has made unauthorised profits in breach of their fiduciary duties to dissipate those profits to the detriment of the company. James Pickering KC, barrister at Enterprise Chambers, Christopher Parker KC, barrister at Maitland Chambers, and Eleanor Temple KC, barrister at Kings Chambers, comment on the implications of the judgment.

Restructuring and Insolvency weekly highlights—24 July 2025

This week's edition of Restructuring and Insolvency weekly highlights includes: an analysis of the Supreme Court’s decision affirming that a defendant is liable in dishonest assistance for assisting a fiduciary who has made unauthorised profits in breach of their fiduciary duties to dissipate those profits to the detriment of the company (Stevens v Hotel Portfolio II UK Ltd), the Court of Appeal’s decision in a matter where property rights may be affected in applications for recognition of foreign bankruptcy proceedings (Vesnin v Queeld Ventures Ltd), a look at the applicability of the equity of exoneration (Armstrong v Harrow), plus a round-up of other news and cases for restructuring and insolvency professionals.

Scotland’s AiB publishes insolvency statistics for Q1 2025–26

The Accountant in Bankruptcy (AiB) has published official statistics on statutory debt solutions and company insolvencies in Scotland for the first quarter (Q1) of the financial year 2025–26. The AiB recorded 1,935 personal insolvencies, 119 less than in the same quarter the previous year. The data further shows that 739 bankruptcies were awarded, 4.7% lower than in the same quarter in 2025–26.

Challenging statutory demands on jurisdictional grounds (Peretie v Eden Farm SRL)

Restructuring & Insolvency analysis: The court held that when deciding whether to set aside a statutory demand it was not open to the court to take into account any jurisdictional issues. However, the court did provide guidance on what should happen if an application to set aside a statutory demand was dismissed, but there was clearly an arguable case on jurisdiction to be determined if and when a petition for bankruptcy was issued. In such a scenario, the court should ensure that the time from when the creditor is allowed to present a bankruptcy petition, set out in the Order dismissing the application to set aside the statutory demand, provides the debtor with an adequate window in which the debtor could apply for any anti-suit injunction, so that the jurisdictional issue can be tested by the court before a bankruptcy petition is issued. Written by Mark Sands, Head of Personal Insolvency at Opus Business Advisory Group.

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