What happens after a winding-up order is made?
What happens to a company after the court makes a winding-up order against it.
If the High Court makes an order to wind up a company it means that the company has gone into compulsory liquidation.
The High court will appoint the Official Receiver (OR) to act as liquidator for the company. The OR's duties are to:
- forward to the Registrar of Companies a copy of the order
- ensure that the winding-up order is advertised in the Belfast Gazette
- advertise the order in any other way if they feel it is appropriate to do so
- investigate the company's affairs to find out why it failed
The OR will also report to creditors on the company's assets and liabilities and tell them the likelihood of them being repaid any of their money. The OR also has a duty to investigate the causes of the failure of the company and the conduct of the directors. Where there are assets they may call a meeting of creditors, or ask the Department for Economy to appoint an insolvency practitioner (IP) to sell the assets and pay creditors.
Duties of company directors in liquidation proceedings
During a compulsory liquidation proceeding, the company's directors have the following duties:
- giving information about the company's affairs to the OR
- giving information about the company to any IP
- preserving the company's assets and handing them over to the OR or liquidator
The OR will interview the directors face to face. They will ask for information about the company's accounts, cashflow, assets and liabilities, and anything else affecting its ability to trade.
Directors can make a statement of truth about their conduct, which is admissible as evidence. The OR can also take into account statements of truth made by creditors, other company officials or employees, or third parties such as accountants.
The directors have a duty to ensure that the company's assets have not been disposed of. They must also give the OR or liquidator any management accounts, company books and records, insurance policies and bank statements relating to assets held.
For more information, see company liquidation.
Stays, rescissions and appeals
Even after an order has been made, the winding-up procedure can be stayed or rescinded, or the company can appeal against it. Applications for a permanent or temporary stay can be made by the liquidator, the OR or any creditor. If the High Court grants a permanent stay, the directors will usually regain control of the company.
The High Court can also rescind, or cancel, an order at the request of the OR, the liquidator or creditors. A rescission can be granted if it can be shown, for example, that the High Court did not have all the relevant facts when it was considering the order. Applications must be made within seven days of the order, unless the High Court gives permission otherwise.
The High Court's staff will tell you how to apply for a stay or rescission.
Period of liquidation
How long it takes to liquidate a company's assets will depend on its size and the complexity of its assets and liabilities. It can take some time for the liquidator to establish the facts concerning these, and to translate them into funds for release to creditors.
When the liquidation is complete following a final meeting, the liquidator will give notice to the High Court that winding up is complete and will be released from office. Three months from the date of the notice from the liquidator or OR, the company will be dissolved, unless a request for a deferral has been made. The company is then removed from the public Register at Companies House and ceases to exist.