Winding-up orders: what happens after the order

A winding-up order is the court’s decision, at the hearing of a petition, that a company is to be wound up. The company enters compulsory liquidation. This guide follows what happens from the order to the company’s dissolution in England and Wales, under the Insolvency Act 1986, and what each step leaves on the public record.

The order reaches back to the petition

A winding up by the court is treated as having begun when the petition was presented, not when the order was made (section 129). Any disposition of the company’s property after that date is void unless the court orders otherwise (section 127). Payments out of the company’s bank account between petition and order are dispositions, which is why banks freeze accounts once a petition is advertised, and why a company that needs to keep trading while it contests a petition applies for a validation order.

What happens at once

• The official receiver becomes liquidator, by virtue of the office (section 136). The official receiver is an officer of the Insolvency Service attached to the court.
• Claims against the company stop. No action or proceeding may be started or continued against the company or its property without the court’s permission (section 130).
• The order is made public. The official receiver must give notice of the order in The Gazette as soon as reasonably practicable, and a copy of the order goes to the registrar of companies (rule 7.22 of the Insolvency (England and Wales) Rules 2016).
• The directors’ powers end. Running the company passes to the liquidator.

An application to rescind a winding-up order must be made within five business days of the order (rule 12.59). After that the order stands unless it is appealed.

The investigation

The official receiver must investigate the causes of the company’s failure and, generally, its promotion, formation, business, dealings and affairs (section 132). Two duties follow that matter to anyone checking a director:

• A statement of affairs. The official receiver may require the directors, and others who were officers or employees in the previous year, to submit a statement of the company’s assets, debts and creditors within 21 days of being asked (section 131). See how to read a statement of affairs.
• A report on the directors’ conduct. The office-holder must report to the Secretary of State on the conduct of every person who was a director in the three years before the insolvency, within three months of the order (section 7A of the Company Directors Disqualification Act 1986). The report is not published. It is the usual starting point for director disqualification.

A liquidator other than the official receiver

The official receiver may ask the creditors to nominate an insolvency practitioner to take over as liquidator, and must decide whether to do so within twelve weeks of the order. The official receiver must seek nominations if a quarter in value of the creditors ask (section 136). Where the assets are small the official receiver often remains liquidator to the end.

The end: dissolution

When the winding up is complete, the liquidator sends a final account to the registrar, or the official receiver gives notice that the winding up is complete. The registrar registers it, and the company is dissolved three months later (section 205). On an application by the official receiver or anyone else with an interest, the Secretary of State can defer the dissolution.

What the register shows

From the order, the company’s status on the Companies House register is “Liquidation”. The filing history shows the order, the liquidator’s appointment and the liquidator’s later documents, and finally the notice that ends the winding up. Three months after that the status becomes “Dissolved”. The register does not show the petition, the official receiver’s investigation or the conduct report. See company statuses for how compulsory liquidation compares with the other insolvency processes.

In a report

A Check the Director report shows, for every company the person has been an officer of, the insolvency record on the register, with each event’s type and date and its source. Two of its published criteria are measured against those dates: “Insolvency during or within 12 months after office” and “Left office within 6 months before insolvency or strike-off”. Where a liquidation statement of affairs is on the register, the report reads it and cites the figures to the page. The petition that led to the order appears too, from The Gazette, where it falls within the period of notices the report checked. See winding-up petitions and The Gazette.

This guide describes the public record in general terms, for England and Wales unless it says otherwise. It is not legal advice.