The High Court has the power to order that a company be wound-up and that a liquidator be appointed. The Court will only exercise this power if an application is made by a party with standing to make it, and if there are circumstances warranting the order being made.
The parties with standing to apply to the Court for a winding-up order are the company itself, a creditor, or a shareholder. In certain circumstances the ODCE may also apply to the Court foran order winding-up a company.
There are a wide range of circumstances in which the Court may make a winding-up order, but they are most frequently made in circumstances where the Court is satisfied that the company is unable to pay its debts. A company is deemed to be unable to pay its debts if a creditor owed a debt of more than €10,000 has served a statutory demand and the debt has not been paid within 21 days. A company will also be deemed to be unable to pay its debts if a creditor secures a judgement for a debt against the company and it is not paid. Of course, if the company admits that it is insolvent then the Court will generally accept that to be the case.
The party who applies for the winding-up order must nominate a person to be appointed as liquidator.
Once the Court makes a winding-up order a Court liquidation proceeds in substantially the same way as a creditors voluntary liquidation except for the following differences.
- The company’s members need not pass a winding-up resolution, and the directors do not summon a meeting of the company’s creditors.
- The liquidator will generally summon a meeting of creditors shortly after his appointment for the purpose of appointing a committee of inspection and approving the basis of his fees.
For information about Court liquidations or to discuss how we can help you please contact Declan de Lacy at email@example.com or by telephone at 01 531 1111.