Where a company is wound up by the court, there are costs incurred that do not apply in other company insolvency processes. The most notable of these is the level of fees that are payable to the government, known as Secretary of State Fees. These fees, which can be substantial, are effectively a levy on the value of assets realised in the liquidation and distributions paid to creditors.
Delays often arise between the making of the winding up order and the appointment of a liquidator, which can result in certain assets, notably debts owed to the company, becoming extremely difficult to recover.
Often a creditor who has petitioned for the compulsory winding up of a company will be receptive to a proposal for the company to be placed into Creditors Voluntary Liquidation, particularly where this procedure is likely to produce a more rapid realisation of assets and consequential increased dividend prospects for creditors. Communication must however begin at the earliest possible stage. Preferably, immediately after the petition is served on the company.