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Compulsory Liquidation Advice

Compulsory liquidation advice can be given in many different ways but there are only three different types of liquidation; members’ voluntary liquidation, creditors’ voluntary liquidation and compulsory liquidation. This is not something every company goes through and it should not even be taken into consideration if the party has not received any legal help or has not been given compulsory liquidation advice. Something as serious as this is cannot be done without legal or financial advice to the accused party.

Members’ Voluntary Liquidation:

This happens when the company’s shareholders choose to put it into liquidation and all the debts the company may have can be covered by their assets.

Creditors’ Voluntary Liquidation:

This is the opposite of the members’ voluntary liquidation because what happens is, the shareholders decide that liquidation will be best but they do not have enough assets to pay of debts, then the company will become insolvent.

Compulsory Liquidation:

This happens when the court says the company has to be wound upon the petition of a specific individual. If there is not only one director then all the directors have to come together to present the petition as it is not possible for one director to present a winding up petition.

There are three alternatives to liquidation:


This is when the court grants admission orders. The purpose of this is to relieve the company just a little bit and give them some space from the creditors. This helps the company as they are guaranteed to be stressed out at the time and may make foolish decisions.

Informal Arrangement:

The company can choose to make payment plans in writing, to the creditors and try to come to some sort of mutual agreement before the issue gets to the courts. This is often the solution, but not all creditors will agree to it.

Company Voluntary Arrangement:

This is like the informal arrangement, except this one is formal and includes the directors applying to the court involved with some assistance of an authorized insolvency practitioner.

Written by Antonious Lamston. Find more information on Compulsory Liquidation Advice

Source: www.articletrader.com