Winding Up and Liquidation
Bringing an entity to an end
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Winding up realises an entity's assets, pays its creditors and brings it to an end. Part XIII of the Companies Act 1981 governs it for companies, and Part 13 of the Limited Liability Company Act 2016 for LLCs.
| Members' voluntary | The entity is solvent. A statutory declaration of solvency is made, the members resolve to wind up, and they appoint the liquidator |
| Creditors' voluntary | No declaration of solvency, or the declaration cannot be made. A meeting of creditors is held, and the creditors have the say in appointing the liquidator |
| By the Court | On a petition, on the grounds set out in section 161, of which inability to pay debts is the most common |
The three modes are set out in section 157. A voluntary winding up commences at the time the resolution is passed, and notice of the resolution is given.
Inability to pay debts has a statutory meaning
Section 162 defines it, and it includes an unsatisfied judgment and an unpaid statutory demand, not only a balance sheet test.
Liquidation filings
- the statutory declaration of solvency, in a members' voluntary winding up
- the notice of the resolution to wind up voluntarily
- the appointment of the liquidator, and any change in the appointment
- the liquidator's contact details, which the entity or the liquidator must give us as soon as practicable after the appointment, and not later than thirty days, and again on any change
- the final account and return following the final meeting, on which the entity is dissolved
Dissolution in a members' voluntary winding up happens under section 213, and in a creditors' voluntary winding up under section 223.
Retaining beneficial ownership records
Where an entity has been wound up and is about to be dissolved, the liquidator must keep the beneficial ownership register that was in existence at the commencement of the winding up for at least five years from the date of dissolution.
Where a partnership is dissolved, the partner or partners, or the person appointed to wind up its affairs, keep the beneficial ownership register that existed at dissolution for at least five years from the conclusion of the winding up.
Restoration is possible
Where a company has been dissolved, the Court may declare the dissolution void, within ten years in the case of a members' voluntary winding up and within five years in any other case.
RELATED
OTHER GUIDES IN CHANGING OR ENDING AN ENTITY