A creditor issues a Winding Up Petition - The first step is for a creditor to issue a Winding Up Petition against the company. The creditor must be owed £750 or more and have waited at least 21 days for you to repay the debt before issuing the petition.
The creditor advertises the petition - If the court accepts the WUP petition, the creditor must advertise it in the Edinburgh Gazette and a local newspaper. Interested parties have eight days to lodge ‘answers’ to the petition with the court. At this point, the banks will become aware of the petition and typically freeze the company’s bank account, which makes it very difficult to trade.
The court makes a Winding Up Order - If ‘answers’ are lodged to the petition, the court will arrange a hearing to discuss matters further and determine whether to make a Winding Up Order. If there are no ‘answers’ to the petition, the court can make a Winding Up Order to liquidate the company. There must be at least eight days between the creditor advertising the WUP in the Gazette and the Winding Up Order being made.
The court appoints a liquidator - The court will appoint a liquidator to take control of the company. This will initially be an Official Receiver although the liquidation may later be sent to an independent Insolvency Practitioner to deal with. They will sell the company’s assets and use the proceeds, plus any cash held in the company bank account, to repay its creditors as far as possible. The liquidator will also investigate the conduct of the company directors in the period leading up to and during the liquidation.
The company is dissolved - Once all the assets have been liquidated and the proceeds distributed, the company will be removed from the register at Companies House and it will cease to exist. Any remaining debts will be written off unless the director has signed a personal guarantee or faces personal liability issues due to their conduct.