The process and purpose of winding up can be summarised as a process ‘to make equable and rateable distribution of all assets of a company … amongst all creditors of the company without favour or preference’ (Ince Hall Rolling Mills Company Ltd v Douglas Forge Company)
Summary of the winding up process
Upon winding up all the assets of the company are collected and distributed amongst creditors. The company will continue to carry on business and can enter and complete transactions but only for the purpose of winding up its’ affairs in the interest of creditors and shareholders.
However any other transactions entered into will be void and no contracts can be executed by the company. As a whole from the moment the company is wound up the company is stopped as a going concern.
Role of a Liquidator in winding up petitions
The role of a liquidator is to collect and distribute the company assets in accordance with Insolvency Act 1986. Liquidators are an officers of the court and have special powers which enable them to fulfill their role.
Another aspect of their role is to remove the company from legal relationships. Liquidators ensure that all contracts are completed, transferred or brought to an end and that all liabilities are accounted for and legal disputes settled.
Surplus on winding up
Once the company has been wound up and the liquidator has distributed all assets to creditors it is possible that there is some assets left over, also known as surplus. According to section 154 Insolvency Act 1986 this surplus can be distributed amongst people entitled.
‘People entitled’ can include shareholders of the company. Some restrictions do exist on shareholders benefiting from surplus but generally shareholders can benefit if the company constitution states so.
Winding up expert lawyers
We are a specialist City of London law firm made up of Solicitors & Barristers and based in the Middle Temple Inns of Court adjacent to the Royal Courts of Justice. We are experts in dealing with matters surrounding insolvency. We will be able to offer your company a fixed fee service to make a Validation application to the Companies Court at the Royal Courts of Justice (Rolls Building), or the relevant High Court District Registry or County Court with jurisdiction. Whilst we are based in London we provide national coverage across all Courts in England & Wales. We offer free initial telephone advice on winding up matters.
Our Winding-Up Experts are able to give specialist legal information and advice relating to winding up matters and connected applications. To contact one of our Solicitors or Barristers please click here or call 0845 8622 529.