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

Application of the 'Lundy Granite' principle to termination/close out scenarios (Conway v Plass)

Restructuring & Insolvency analysis: The High Court (Chancery Division) held that Joint Special Administrators of Argentex LLP would not incur liability (to be treated as an administration expense) either by not performing Trading Book contracts or by closing out customer contracts. Applying the Lundy Granite principle, mere non-performance of contracts does not create administration expenses without positive conduct showing election. The court's objective analysis found no benefit to the administration estate from closing out contracts. The judgment provides essential guidance on when liabilities become administration expenses, particularly clarifying that administrative convenience alone does not constitute sufficient benefit to the estate. Practical implications written by Aziz Abdul and Paddy Bird of Addleshaw Goddard.

Failed challenge to office-holder’s remuneration payable from fixed charge realisations (Pagden v Ridgley)

Restructuring & Insolvency analysis: The High Court confirmed that amounts paid to an administrator by way of remuneration and expenses for the realisation of fixed charge assets cannot be challenged under Insolvency (England and Wales) Rules 2016 (IR 2016), SI 2016/1024, r 18.34, which only concerns remuneration that is payable to an administrator in respect of the administration of assets as part of the insolvency process, from the company’s assets. While this decision confirms existing principle and practice, challenges remain possible through other routes, including under paragraphs 74 and 75 of Schedule B1 to the Insolvency Act 1986 (IA 1986). Practical implications written by Sam Fenwick, partner, and Yasin Khan, solicitor apprentice, of Wedlake Bell LLP.

Injunctive relief necessary to protect integrity of English jurisdiction (Altrad Investment Authority SAS and others v Protopapas and others)

Restructuring & Insolvency analysis: The High Court granted declarations and injunctive relief to protect the English jurisdiction from foreign proceedings that sought to undermine settled English authority. Mr Justice Marcus Smith held that exceptional circumstances justified interference where a South Carolina receivership constituted a collateral attack on established English precedent. The judgment reinforces the court’s readiness to use declaratory and injunctive remedies against foreign overreach, confirms that ‘long-arm’ receiverships lacking proper connection will not be recognised, and upholds corporate separateness principles from Adams v Cape. Written by Justin Perring of New Square Chambers.

Restructuring & Insolvency weekly highlights—23 October 2025

This week's edition of Restructuring & Insolvency weekly highlights includes: analysis of the court’s decision confirming that liquidators cannot limit their liability in their engagement terms (Pagden v Fry), the court’s judgment on an application by trustees in bankruptcy seeking annulment of a bankruptcy order, as they could not recover the bankruptcy estate located in Austria because Austrian courts refused to recognise the bankruptcy order (Nilsson (as joint trustees in bankruptcy of Timothy Edward Jones) v Jones), plus a round-up of other news and cases for restructuring and insolvency professionals.

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