Compulsory Liquidation

Compulsory liquidation has one outcome – the closure and sale of a business that’s unable to repay its debts.


Companies follow a clearly defined route once a compulsory liquidation commences and the process is governed by legal protocol. It begins with a petition being filed at court – normally by those who are owed money – and a judge subsequently decides whether liquidation is appropriate.

If a winding up order is made, the Official Receiver (OR) is initially appointed as “liquidator” although the company’s creditors often appoint a licensed insolvency practitioner in the OR’s place.

Working as an officer of the court, the liquidator’s main function is to recover as much money as possible from a company’s assets to repay creditors.

“Liquidators have wide-reaching powers to assist them in fulfilling their role. For example, they can bring legal proceedings in the name of the company, carry on the business of the company and pay debts. Consequently, the professionalism and knowledge brought to the proceedings by an insolvency practitioner ultimately determines how much money creditors recoup.”


Edward Gee, Partner – CG&CO

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