Particular topics: company winding up etc.: introduction
Under Part IV Insolvency Act 1986, a company may be wound up by:
- order of the court, or
- voluntarily by resolution of the company.
After the winding-up order or resolution, a liquidator is appointed. All creditors entitled to prove their debts may do so. For companies wound up by order of the court, the Official Receiver acts as liquidator until a liquidator is appointed. In certain circumstances the Official Receiver is appointed as liquidator. The term ‘liquidator’ in this chapter includes ‘the Official Receiver by virtue of his office becoming the liquidator of the company’.
A ‘members’ voluntary winding-up’ is a voluntary winding-up in which the directors make a statutory declaration that the company will be able to pay its debts in full within twelve months of the commencement of the winding-up. If no such declaration is made, the winding-up is known as a ‘creditors’ voluntary winding-up’.
In a ‘members’ voluntary winding-up’, the company has been declared solvent and able to pay all tax due in full, irrespective of any question of preferential year. A ‘creditors’ voluntary winding-up’ is not necessarily a sign of insolvency. If there is reason to believe the winding-up is on some other grounds, the company’s solvency should be determined.
Striking-off of defunct company
A company may be struck off the Companies Register by the Registrar without winding-up proceedings if he has reasonable cause to believe it is not carrying on business or in operation – CA06/S1000, formerly CA85/S652. This sometimes occurs inadvertently, where the company has moved without notification and it does not respond to notices. There is a procedure for restoration on application of a member or creditor of the company, but this normally requires court intervention.
Voluntary striking-off and dissolution
This procedure was introduced by the Deregulation and Contracting Out Act 1994 by the insertion of sections 652A to 652F into CA85. The provisions are now at CA06/S1003 to S1007. The measure was introduced as a simplification for private companies that are not trading and are no longer needed, perhaps because directors wish to retire without the appointment of successors, or a subsidiary is no longer required.
It is not an alternative to winding up where creditors are involved. The essence of a winding-up is that it makes orderly provision for the conclusion of a company’s affairs and distribution of assets. It is not appropriate to refer to striking-off and dissolution as an ‘informal winding-up’.
CTM36200 onwards gives moer information about dissolution of companies.