IVA Glossary
C
Compulsory Liquidation
If a company is facing debt issues that were not correctly settled and resolved with the creditors, these may ask the court to place the company into liquidation.
Usually, this is a last step a creditor will take against a debtor company. Before asking for liquidation, the company may have went through a company voluntary arrangement unsuccessfully (the debtor didn't keep up with the scheduled repayments).
The expenses for the procedure of asking the court to place the company into compulsory liquidation will be supported by the creditors themselves. It is not a cheap venture, but the outcome is most of the times positive for the creditors. If the debtor company is not able to clear off debts in a short period, it enters into liquidation, which means that the whole administrative, managerial and financial aspects of the company enter under the jurisdiction of the Official Receiver's Office, which is a Governmental department.
After the liquidation is concluded, it generally takes three months until the company is dissolved. In order to be able to defer dissolution, the liquidation must have been on a voluntary basis, and not through a petition filed to the Court by the creditors. A voluntary liquidation process is usually supervised by an insolvency practitioner, while a compulsory one by the Official Receiver (OR).
Usually, this is a last step a creditor will take against a debtor company. Before asking for liquidation, the company may have went through a company voluntary arrangement unsuccessfully (the debtor didn't keep up with the scheduled repayments).
The expenses for the procedure of asking the court to place the company into compulsory liquidation will be supported by the creditors themselves. It is not a cheap venture, but the outcome is most of the times positive for the creditors. If the debtor company is not able to clear off debts in a short period, it enters into liquidation, which means that the whole administrative, managerial and financial aspects of the company enter under the jurisdiction of the Official Receiver's Office, which is a Governmental department.
After the liquidation is concluded, it generally takes three months until the company is dissolved. In order to be able to defer dissolution, the liquidation must have been on a voluntary basis, and not through a petition filed to the Court by the creditors. A voluntary liquidation process is usually supervised by an insolvency practitioner, while a compulsory one by the Official Receiver (OR).
