EG 13.7 1Petitioning for compulsory winding up of a company already in voluntary winding up

1Section 365(6) of the Act makes it clear that the FCA may petition for the compulsory winding up of a company even if it is already in voluntary winding up. This power is already available to creditors and contributories of companies in voluntary winding up. For example, the court can be asked to direct the liquidator to investigate a transaction which the company undertook before the winding up. In some circumstances, this power may be used in respect of partnerships (section 367 of the Act).

1Given the powers available to creditors (or contributories), the FCA anticipates that there will only be a limited number of cases where it will exercise the right under section 365(6) to petition for the compulsory winding up of a company already in voluntary winding up. The FCA will only be able to exercise this right where one or both of the grounds on which it can seek compulsory winding up are met.

1Factors which the FCA will consider when it decides whether to use this power (in addition to the factors identified in paragraphs 13.5.1 to 13.6.3 in relation to the FCA's decisions to seek compulsory winding up) include:

1. (1)

   whether the FCA's concerns can properly and effectively be met by seeking a specific direction under section 365(2) of the Act;

2. (2)

   whether the affairs of the company require independent investigation of the kind which follows a compulsory winding up order and whether there are or are likely to be funds available for that investigation;

3. (3)

   the composition of the creditors of the company including the ratio of consumer and non-consumer creditors and the nature of their claims;

4. (4)

   the extent to which there are creditors who are or are likely to be connected to the company or its directors and management;

5. (5)

   the extent to which the directors and management are cooperating with the liquidator in voluntary winding up;

6. (6)

   the need to protect and distribute consumers’ claims and assets;

7. (7)

   whether a petition by the FCA for compulsory winding up is likely to have the support of the majority or a large proportion of the creditors; and

8. (8)

   the extent of any resulting delay and additional costs in seeking a compulsory winding up order.

1Where the FCA is requested by a Home State regulator of an EEA firm or a Treaty firm to present a petition for the compulsory winding up of that firm, the FCA will first need to consider whether the presentation of the petition is necessary in order to comply with a Community obligation.