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Liquidate your limited company

Compulsory liquidation

Last updated
1 Oct 2021

The directors or the company (the shareholders) can ask the court to put the company into liquidation. This is known as a compulsory liquidation.

This means the company will stop trading and be ‘wound up’.

You should get advice from a solicitor, your accountant or an insolvency practitioner before taking action to liquidate your company.

You need to show the court that:

  • the company cannot pay its debts of £750 or more (it is insolvent)
  • the company has passed a special resolution to ask the court to wind up the company

The company or directors must make an application to the court to wind up a company by ‘petition’.

You should seek advice from a solicitor or insolvency practitioner. They'll:

  • help you to prepare the right paperwork to support the petition
  • tell you which court the petition needs to be sent to
  • tell you who can send the petition to the court

If the company’s paid-up share capital is £120,000 or more, the petition must go to the Court of Session.

If the company’s paid-up share capital is under £120,000, the petition:

  • should go to the Sheriff Court of the Sheriffdom where the company’s registered office has been for most of the previous 6 months
  • could go to the Court of Session

Find a Sheriff Court on the Scottish Courts website.

Appointing a liquidator

If the court accepts your petition, they'll arrange a date for a hearing. The court has discretion in how to deal with the petition. Usually the court requires the applicant  to advertise the petition:

The petition will also be shown on the walls of the court.

Sheriff Officers will also serve the petition on any parties who the court considers appropriate.

Interested parties have 8 days to lodge (submit) answers to the petition with the court.  

After 8 days, your solicitor will check with the court to see if any answers have been lodged in response to the petition.

If there are no answers lodged, your solicitor will:

  • send to the court a proof of the advertisement
  • send to the court evidence that sheriff officers served the petition
  • ask the court to appoint an interim liquidator

The court will issue the winding up order if they, both:

  • are satisfied that the petition was advertised and served as the court instructed
  • have received no objections from interested parties

If any party responds opposing the petition to wind up the company, the court may organise a hearing to discuss matters further. The court will then decide whether or not to, both:

  • make a winding up order
  • appoint a liquidator

Once appointed, the liquidator will take control of the company. Your responsibilities as a director will change.

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