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Access all documents on Compulsory winding up
The court supervised process by which a company's assets are realised for the benefit of its creditors.
Such process is to be contrasted with voluntary winding up which does not involve court proceedings and is initiated by the company itself. There are several powers which are only available in a compulsory winding up.
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A summary checklist and timeline for the presentation, service and advertisement of a winding-up petition to the court by a creditor of a company registered in England or Wales The Corporate Insolvency and Governance Act 2020 contained provisions which, on a temporary basis, imposed significant limitations on the ability for a creditor to seek a winding-up order against a company. For the position pre-1 October 2021, see Practice Note: Corporate Insolvency and Governance Act 2020—temporary changes to corporate statutory demands and winding-up petitions [Archived]. For the position from 1 October 2021 to 31 March 2022 (including an increase in the amount required for a petition debt and the need for a creditor to give 21 days’ notice of its intention to present a winding-up petition), see Practice Note: Corporate Insolvency and Governance Act 2022—winding-up petitions from 1 October 2021 to 31 March 2022 [Archived]. Step/action Time (days) Section/rule Serve statutory demand Draft statutory demand which must contain the information set out in rule 7.3 of the Insolvency...
A summary checklist and timeline for winding-up a company on an unsecured debt (with statutory demand) The Corporate Insolvency and Governance Act 2020 contained provisions which, on a temporary basis, imposed significant limitations on the ability for a creditor to seek a winding-up order against a company. For the position pre-1 October 2021, see Practice Note: Corporate Insolvency and Governance Act 2020—temporary changes to corporate statutory demands and winding-up petitions [Archived]. For the position from 1 October 2021 to 31 March 2022 (including an increase in the amount required for a petition debt and the need for a creditor to give 21 days’ notice of its intention to present a winding-up petition), see Practice Note: Corporate Insolvency and Governance Act 2022—winding-up petitions from 1 October 2021 to 31 March 2022 [Archived]. Step/action Time (days) Section/rule 1. Prepare statutory demand. See Form: (Form SD1) r 7.3 WU Statutory Demand under section 123(1)(a) or 222(1)(a) of the Insolvency Act 1986 (Formerly form 4.1). Day 1 Insolvency (England and Wales) Rules...
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This Practice Note provides guidance as to the practice and procedure which applies on the winding up of a company (the debtor) pursuant to a creditors’ winding-up petition.The most common circumstances in which a winding-up petition will be issued are:•where a creditor has served a statutory demand on the debtor and the 21-day period has expired without the company paying, securing or compounding the sum so due (see Practice Note: Company statutory demand). Note, however, that it is not necessary to issue a statutory demand before presenting a winding-up petition, but it is merely one method of demonstrating that a company is unable to pay its debts•where a creditor has a judgment in its favour and has issued execution against the debtor, which is returned unsatisfied, either for the full amount or part of the judgment debt•where it is proved to the satisfaction of the court that the debtor is unable to pay its debts as and when they fall due (see Practice Note: Compulsory liquidation—issuing a petition and Can...
This Practice Note sets out guidance as to what happens when proceedings have been commenced against a company and:•a winding-up petition is presented against the company, or•the company's members pass a resolution to wind it up through a creditors' voluntary liquidation (CVL)Any formal insolvency proceeding is a collective remedy. This means that all unsecured creditors rank equally. A judgment obtained in any proceedings against the company does not create any form of priority over other creditors in the same class. Nor is a judgment any form of security. It follows that the decision whether to continue proceedings against a company which is being wound up is primarily a commercial one rather than a legal one. There is frequently no commercial advantage in incurring further legal costs against an insolvent company. For further reading, see: Proof of debt—overview.It should also be borne in mind that any disposition of any company property after the presentation of a winding-up petition is void under section 127 of the Insolvency Act 1986 (IA 1986) unless:•it...
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Phantom share option agreement This AGREEMENT is made on [insert date of execution of the phantom share option agreement] Parties 1 [insert name of company whose shares are relevant to the phantom option] (registered number [insert registered number of company]) whose registered office is at [insert registered address of company] (the Company); and 2 [insert name of option holder] of [insert address of option holder] (the Option Holder) Background (A) The Company has agreed to grant to the Option Holder as at the date of this Agreement a Phantom Option on the terms set out in this Agreement. (B) The Phantom Option provides an entitlement to cash and not shares. 1 Definitions In this Agreement, except where the context otherwise requires, the words and expressions set out below will bear the following meanings, namely: Cash Payment • means the cash sum payable on the exercise of the Phantom Option, which shall be calculated in accordance with clause 6.2; Control • has the meaning given...
Unapproved share option agreement—standalone deed for employee This AGREEMENT is made on [insert date of execution of the share option agreement] Parties 1 [insert name of company whose shares are being granted under option] (registered number [insert registered number of company]) whose registered office is at [insert registered address of company] (the Company);[and] 2 [insert name of option holder] of [insert address of option holder] (the Option Holder) [and] 3 [[insert name of grantor (if different from company)] of [insert address of grantor] (the Grantor)] Background (A) [The Company has agreed to grant to the Option Holder as at the date of this Agreement an Option to acquire Shares on the terms set out in this Agreement. OR The Company and the Grantor intend that, as at the date of this Agreement, the Option Holder be granted an Option to acquire Shares on the terms set out in this Agreement.] (B) [The Company will satisfy the exercise of the Option by transferring or procuring the...
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What are the consequences for a creditor who takes over carriage of the petition from another creditor in a compulsory winding up? The compulsory winding up process A compulsory liquidation is commenced by court order. Most frequently, such an action is commenced by a company’s creditors. For information on when creditors can issue a winding-up petition see: Compulsory liquidation—overview at the section entitled ‘By its creditors’. See also Practice Note: Compulsory liquidation—issuing a petition. The winding up process can be issued in the County Court that has jurisdiction to wind up the company if the amount of the company's paid up share capital does not exceed £120,000; alternatively the High Court has the jurisdiction to wind up any company in England and Wales. There are requirements as to the form of the winding up petition, the information that the winding up petition must include, service of the winding-up petition, advertisement of the petition and various other requirements for the winding-up petition to be valid, validly served and...
Can a statutory demand be served on a debtor in England and Wales in respect of a money judgment made in another jurisdiction? In answering this Q&A it has been assumed that the debtor’s centre of main interests is in England and Wales. A statutory demand is served on a debtor under section 268 of the Insolvency Act 1986 (IA 1986) by a creditor owed more than £5,000 (the bankruptcy level) by an individual debtor or under IA 1986, s 123 by a creditor owed more than £750 by a debtor that is also a limited company. If payment in full of the outstanding debt is not received by the creditor within 21 days of the service of the statutory demand then this is legal proof that the corporate debtor is insolvent and that the individual debtor is unable to pay his debts as they fall due. The creditor can then petition for the compulsory winding up of the corporate debtor or petition for the bankruptcy of...
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Insurance & Reinsurance analysis: The Court of Appeal applied ordinary black letter contractual interpretation in construing a non-assignment clause in a contract for sale. As the Court of Appeal stated: ‘At its core, this appeal raises a single issue of contractual interpretation’. The appeal considered whether a party who entered into an insurance contract to protect against the late delivery of two planes which resulted by reason of Japanese law in the automatic assignment of its interest in the planes could be considered to have violated a non-assignment clause in the sale contract. The Court of Appeal applying the usual rules of construction found that the non-assignment clause was only engaged where a party was responsible for the assignment and not where assignment occurred independently of the party, on the facts of this case by the operation of Japanese Law. Written by Lauren Godfrey, barrister at Gatehouse Chambers.
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(1)    The High Court has jurisdiction to wind up any company registered in England and Wales.(2)    Where [in the case of a company registered in England and Wales the amount of its] share capital paid up or credited as paid up does not exceed £120,000, then (subject to this section) the county court . . . has concurrent jurisdiction with the High Court to wind up the company.[(2A)    Despite subsection (2), proceedings for the exercise of the jurisdiction to wind up a company registered in England
(1)Â Â Â Â If, before the presentation of a petition for the winding up of a company by the court, a resolution has been passed by the company for voluntary winding up, the winding up of the company is deemed to have commenced at the time of the passing of the resolution; and unless the court, on proof of fraud or mistake, directs otherwise, all proceedings taken in the voluntary winding up are deemed to have been validly taken.[(1A)Â Â Â Â Where the court makes a winding-up order by virtue of paragraph
Compulsory winding up is referenced 5 in UK Parliament Acts
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