Compulsory winding-up is a legal process by which a liquidator is appointed by order of the court to 'wind up' the affairs of a limited company. At the end of the process the company ceases to exist. Winding up does not mean that the creditors of the company will necessarily get paid. The purpose of winding up a company is to ensure that all the company's affairs have been dealt with properly.
This involves:
Ensuring all company contracts (including employee contracts) are completed, transferred or otherwise brought to an end;
Ceasing the company's business;
Settling any legal disputes;
Selling any assets;
Collecting in money owed to the company; and distributing any funds to creditors and returning share capital to the shareholders (any surplus after repayment of all debts and share capital can be distributed to shareholders).
When these things have been done the liquidator applies to have the company removed from the register at Companies House and dissolved, which means the company ceases to exist.
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