Can the courts or a creditor forcibly close my company?

Shaun Barton

Shaun Barton | Company Closure Expert

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Can the courts or a creditor forcibly close my company?

If your company is struggling to repay its creditors due to serious financial decline, one or more of those creditors might be able to forcibly close your business. They would have to present a winding-up petition at court, which if accepted, would mean compulsory liquidation.

Another way in which your company could be forced to close is via compulsory strike-off, which is initiated by Companies House. So under what circumstances could this happen, and is there anything you can do to stop it or to prevent compulsory liquidation?

Why would Companies House forcibly strike off my company?

Companies House require limited companies to submit statutory returns, including annual accounts and confirmation statements. If you fail to comply with these requirements they could decide to strike your company at Companies House.

This process is sometimes called compulsory dissolution and it can also be used to close companies that are no longer trading. You’ll receive notice from Companies House of the intended strike-off and the reasons for it by way of two official letters.

If you don’t want your company to be forcibly closed in this way you can submit an application to suspend the proceedings, but you’ll also have to rectify the issues laid out in the letter(s).

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Winding up petitions and compulsory company closure

If you owe a debt of £750 or more and it’s proven that your company cannot repay – via an unpaid statutory demand, for instance – your creditor is entitled to petition the court to forcibly close your company.

It’s vital to appeal against a winding-up petition quickly if you have grounds to do so as the petition will be publicly advertised in the Gazette within seven days and this is likely to lead to your bank accounts being frozen.

Submitting a winding-up petition is costly for your creditor and indicates their serious intent to close you down. It typically follows a lengthy period of trying to recover their money through the ‘standard’ routes of reminders and warning letters.

Need to speak to someone?

With multiple offices across the UK and a vastly experienced team of business closure experts, you are never far away from the advice you need. Our Licensed insolvency practitioners provide free consultations to all directors and shareholders, and can quickly ascertain which closure method is best for your business.

We are licensed by recognised professional bodies and have helped thousands of directors over many years. Contact us today for your free company closure consultation.

The implications of compulsory liquidation

Compulsory liquidation should be avoided at all costs if you can as it has serious ramifications for company directors. Initially, it’s important to obtain professional guidance from a licensed insolvency practitioner (IP) on the best way forward.

Creditors’ Voluntary Liquidation does provide a better alternative than a creditor forcibly closing your company, and if you take this voluntary action it lowers the potential for disqualification or personal liability being formally assigned to you.

This is because CVL allows you to fulfil your legal duties to creditors and prevent their unnecessary financial loss. Prioritising creditor interests is key in this situation and can allow you to close your company with few repercussions on a personal level.

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Company Closure can help you avoid enforced closure

Our team at Company Closure will advise on your best course of action and may be able to offer alternatives to liquidation if you act quickly. Please get in touch to arrange a same-day consultation free of charge – we work from offices around the country.

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