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The chapter discusses various aspects of appointing a provisional liquidator. A provisional liquidator of a company may be appointed by the court under the Insolvency Act 1986 (IA 1986), s 135 at any time after the making of an application for a bank insolvency order. Provisional liquidators are independent persons operating under the direction of the court for a purpose that is one entirely of preservation during an interim period. He/she will take charge of the company’s affairs, maintain the status quo and prevent prejudice either to those supporting the winding-up petition or to those against it, pending the court’s decision on the petition. He/she terminates the powers of its directors as effectively as does the making of a winding-up order. The appointment terminates the actual authority of all the company’s agents, but the authority of an agent is not terminated until the agent has notice of the appointment of the provisional liquidator.

The chapter discusses the various processes between presentation and hearing of a winding-up petition. A winding-up petition must be served in accordance with the Insolvency Rules 2016 (IR 2016). Service is the responsibility of the petitioner and will not be undertaken by the court. If service of a petition to wind up a registered company is not to be on the company’s solicitor, the petition must be served at the company’s registered office, if it has one. Other methods of service at the registered office are not permitted. A winding-up order made on a petition that has not been served is fundamentally defective and will normally be set aside. The court can properly refuse to set aside the order only if there is no prejudice to the company or a third party. If an order is made and service is affected under the order, a sealed copy of the order must accompany the certificate of service. The present rules make wider provision for service than previous rules did.

This chapter sets out who can apply for a winding-up order and when a winding-up order can be made where a company is already subject to an insolvency procedure. This chapter discusses the insolvency procedures under the law of England and Wales, other parts of the United Kingdom and outside the UK. A supervisor of a company voluntary arrangement (CVA) approved under IA 1986, part 1, may petition for the compulsory winding up of the company, and the court may appoint the supervisor to be liquidator of the company. IA 1986, part 1, is applied with modifications to building societies by the Building Societies Act 1986. When a company is in administration, no petition for it to be wound up may be presented without the administrator’s consent or the court’s permission, unless it is presented for the purpose of proceedings under the default rules of a recognized body in a financial market.

The chapter observes the hearing of winding-up petitions and making orders. Winding up by the court involves a determination of a civil right within the meaning of the European Convention on Human Rights, art 6(1) (right to a fair trial). A winding-up petition is normally heard by an Insolvency and Companies Court (ICC) judge or a district judge. The court hearing a petition for the compulsory winding up of a company has a discretion to hear anyone who can assist the court, as advocate to the court. A foreign creditor has the same rights regarding participation in proceedings as creditors in Great Britain. On hearing a winding-up petition the court may, at its discretion, dismiss it, or adjourn the hearing conditionally or unconditionally, or make an interim order, or any other order that it thinks fit. The court may order the winding up of a company on application made by petition under IA 1986, s 124.

The chapter discusses the process of applying for and making winding-up orders. Proceedings for Winding Up by the Court Under Insolvency Act 1986 must be made by Petition. Winding up is most often sought by creditors of insolvent companies and is usually seen primarily as an insolvency procedure. Other purposes may justify making a winding-up order. From the time that a court makes an order that a company is to be wound up, the company has a liquidator under IA 1986. The liquidator must take into his custody or under his control all the property and things in action to which the company is or appears to be entitled. A compulsory winding up is wholly dependent on the court. It is for the court to oversee the realization of the assets of the company and their distribution, on the correct principles, among creditors and members. Legislation has made available various company insolvency procedures which, though not winding-up orders or bank or building society insolvency orders, replace a company’s directors with an independent insolvency office-holder who is at least capable of achieving the winding up of the company.

A company may petition for itself to be wound up by the court. The same applies to a building society, an incorporated friendly society, a limited liability partnership (LLP), and any other entity that may be wound up as a registered company. A company’s power to petition for its own winding up may be exercised by its directors, at least if the company has passed a special resolution that the company be wound up by the court, that being a circumstance in which the court may make a winding-up order. A petition by a company for its own compulsory winding up will usually rely on the circumstance that a special resolution has been adopted that the company be wound up by the court. When a resolution for compulsory winding up has been adopted, the court retains a discretion whether or not to make a winding-up order.

Only an insolvent partnership can be wound up on a member’s petition under IPO 1994, but, in practice, almost all contributories’ petitions to wind up registered companies relate to solvent companies. A winding-up petition should not be used as a means of putting pressure on a company to meet the petitioner’s demands in relation to allotment of shares. If the partnership has eight or more members, any member may petition under article 9. If the partnership has fewer than eight members, by IA 1986, s 221A(2) inserted by IPO 1994, Petitions can be presented under article 10 for the winding up of a partnership and the winding up or bankruptcy of every one of its members only by a member of the partnership and only if all the members consent to orders being made against them. Any person liable to contribute to the assets of a registered company in the event of its being wound up is one of the company’s contributories.

Creditors may petition concurrently for the winding up of a partnership and the winding up or bankruptcy of a member or former member of the partnership. It must state how the petitioner came to be a creditor, merely describing the petitioner as ‘creditor’ is not sufficient. A creditor of a private company may apply under the Companies Act 2006, s 758, if the company has contravened the prohibition on public offers by private companies. If a company fails to comply with a statutory demand within 21 days, it will be deemed to be unable to pay its debts, and the claimant may present a winding-up petition. The Court of Appeal held that there should be no order as to costs up to the time the petition was served, but the company should pay the petitioner’s costs thereafter. The onus is on the company to show why it should not be ordered to pay the petitioner’s costs.

The chapter discusses the Court orders which have the effect of winding up companies’ but under the Insolvency Act 1986 (IA 1986). An application for an order that a company be wound up by the court under IA 1986 must be made by petition and can refer to only one company. The petition must contain all necessary allegations in a form which is sufficient to enable the court to make the requisite findings and consider the appropriate order. For all the various types of entity which may be wound up by the court under IA 1986, the relevant legislation specifies the circumstances in which that type of entity may be wound up. These are usually called the ‘grounds’ for winding up. For certain types of company, other persons also have standing to petition for winding up. There are separate rules for building societies, incorporated friendly societies and insolvent partnerships.

The chapter deals with the powers of the Secretary of State and other public officers and bodies to petition for a company to be wound up in the public interest. A petition for winding up in the public interest can only be presented by a person who is authorized to do so by statute. If it appears to the Secretary of State, from the results of any of various investigatory processes, that it is expedient in the public interest that a company should be wound up, petition for that company to be wound up by the court. A decision to present or not present a public interest petition is subject to judicial review. The fact that a regulatory authority has acted to prevent continuation of a company’s objectionable behaviour is not a reason for refusing a winding-up order in the public interest.

The chapter explains the processes of review of orders made for winding-up companies. A court which has made an order in the exercise of its jurisdiction under the Insolvency Act 1986 (IA 1986), parts 1–7, and the corresponding parts of IR 2016 may review, rescind or vary that order. The same provision is made in relation to orders made by the court in the exercise of its bankruptcy jurisdiction. The order may be interim or final. The order may have been made at first instance or on appeal. The power to review, rescind or vary is unfettered but must be exercised judicially. It is not to be used in order to hear an appeal against a decision of a judge of coordinate jurisdiction. The distinction between an appeal and an application to review, otherwise unjust through a serious procedural or other irregularity. An application to review, rescind or vary a decision must be made promptly on learning of the new circumstances which are relied on to justify exercise of the discretion.