Geoff, the company are still trading I believe? The threat of the Winding-Up Order forces them to pay all creditors who can present proof of their debt to the Court by the hearing date. If the debtor settles with all creditors that have joined the proceedings they can avoid the Winding-Up Order.
Most directors that are involved with shonky business practices would want to avoid compulsory liquidation at all costs – since if they’re found to be culpable they can be held personally liable for any debts. And even if they’re blameless they’ll have to pay back all those Dividends or Directors’ Loans that they’ve no doubt been taking instead of salary.
The last thing anyone wants is for the Winding-Up Order to be granted, but it’s a nice Big Stick to wave at people who CAN pay but WON’T pay.
As for not getting anything back, it’s not nearly as likely as it used to be. Any assets in a liquidated company used to be immediately swallowed up by the debts owed to the IR & HMCE, but nowadays HMRC are in the queue with everyone else.
Posted under Late Payment, Legal Issues
Posted by Alec at 8:23 pm, July 31, 2006