Procedure For Winding Up Unregistered Companies

November 1995 

58.14 Application of normal winding-up provisions

The normal winding up provisions of the insolvency legislation apply to the winding up of unregistered companies with the exceptions outlined in paragraph 58.15. The official receiver, as liquidator, and the court may exercise their powers or do any act in respect of an unregistered company as they would in relation to the winding up of a registered company. The official receiver should report to the Secretary of State on the conduct of the officers of the unregistered company and any criminal offences which he considers have been committed (see also paragraphs 58.21 and 58.22).

Notes: [s221(1)][s229(1)]

58.15 Amendments to normal winding up provisions

The official receiver should bear in mind the following differences in procedure when winding up an unregistered company:-

a. The principal place of business of an unregistered company is deemed to be the registered office for the purposes of determining a court’s winding up jurisdiction.

b. Once a winding-up order is made against an unregistered company, every contributory is liable to contribute to the assets of the company in so far as they are insufficient to meet the company’s debts, the expenses of the winding up and any sum for the adjustment of the rights of members amongst themselves. Should a contributory die, or be subject to insolvency proceedings, the liability to contribute will pass to the personal representative of the deceased or to the liquidator or trustee of the insolvent which may be paid out of the bankrupt estate. If the unregistered company was engaged in working mines within stannaries (i.e. a certain type of Cornish tin mining company), there are restrictions upon the contributions which can be made by a member. Should there be insufficient assets within the liquidation so that a call has to be made to members reference should be made to paragraphs 58.16 to 58.20.

c. The rule that no proceedings can be commenced or proceeded with against an unregistered company after the winding-up order applies but is extended to apply to actions against contributories of the unregistered company. Similarly any actions between the date of the petition and the order against either the unregistered company or any contributory can be stayed.

Notes: [s221(3)][s226(1) and (2)][ s81 and 82][s226(3)][s130(2) and 228]

58.16 OR seeking contributions from contributories

Where there are insufficient assets within the liquidation so that a call has to be made to the contributories, the official receiver should make an application to the Secretary of State for the appointment of an insolvency practitioner to act as liquidator where the meetings of creditors and contributories have failed to result in such an appointment. However, before making such an application, the official receiver should settle the list of contributories (see paragraph 58.17) and should ascertain that at least some of the contributories have funds to contribute to the assets.

(Reference should be made to paragraph 31.1.9 for guidance on establishing the status of the contributory). The official receiver might consider it to be appropriate to write to each of the contributories and request details of their proposals for payment of their liability.

It may also be necessary for the official receiver, as liquidator, to make a call on the contributories (see paragraphs 58.19 and 58.20) where he is of the opinion that the contributories are likely to require pressure to discharge their liabilities. If after the call has been made there is no payment, the official receiver should make enquiries of the creditors of the unregistered company to establish if they are prepared to provide funds for legal proceedings to recover the contributories’ liabilities, should the available assets be insufficient to enable this to be done. Whenever possible, application should then be made for an insolvency practitioner to be appointed as liquidator to pursue any legal proceedings.

Notes: [s150][s137]

58.17 Settling the list of contributories

(amended February 2011)

The court’s power to settle the list of contributories is delegated to the liquidator. The official receiver in that capacity should make a list of the names and addresses of each contributory, categorising them into their various classes of membership where different contributions should be sought from each class (forms LOCCL or LOCPL - Document Production Forms).

The official receiver should then send notice, using forms LOCCL or LOCPL, to each contributory advising them that they appear on the list and informing them that they may make representations within 21 days as to why they should not appear on the list. The notices can be sent electronically where the contributory has consented to delivery by such means and has provided an electronic address. A copy of the list should be sent to every contributory with the notice. However, if it is impractical to send the list due to its length, the notice should inform the contributories that a copy may be inspected on the Court file. Only in this situation will it be necessary for the official receiver to file the settled list in court. Where there are a large number of contributories and the list is long, the official receiver could also consider making the list available on a website and notifying the contributories of the website address and any password required (the official receiver must still advise contributories that a hard copy may be requested from him/her).

A certificate of postage or delivery should be retained on the office file, together with a copy of the notice and the settled list. The liability of the contributory should be included in the notice (see paragraph 58.18). If the official receiver receives any objections to the settled list, he/she must within 14 days of receipt of it inform the objector, using form LOCOBJ,  whether or not he/she will amend the list. The objector may apply to the court within 21 days of service of the notice for the list to be varied where the official receiver does not propose to amend the list.

Once the formalities of settling the list have been completed, and the proper period for an appeal against the contents of the list has passed, an application for the appointment of an insolvency practitioner to act as liquidator should be made unless it is necessary for the official receiver to place pressure on the contributories to establish an ability to pay (see paragraphs 58.16, 58.19 and 58.20).

Notes:[s148, s160(1)(b) and R4.195][R4.197][R4.198(1) and (2)][R4.198(3)][R12A.10 to 12A.12][R4.198(4) and 4.200][R4.199]

58.18 Calculating liability of contributory

The liability of the contributories should be calculated on the basis of the known liabilities of the unregistered company plus the estimated expenses of the winding up, but less the value of the known assets. The official receiver should note that in the case of an EEIG, the liability may be limited by the contract (see paragraph 58.10(a)). If any asset has not been realised or if the realisation is likely to be protracted, the official receiver must make a reasonable estimate of its value for this purpose. The estimated expenses should be calculated on the known deficiency of the unregistered company and not on the total possible realisations that would occur if all the contributories paid in full. If there is a dispute as to the amount fixed for the contribution, the contributory should be informed that he/she has an opportunity to appeal against it within 21 days of the service of the notice (forms LOCCL or LOCPL).

Notes: [R4.198(3)]

58.19 Making a request for payment

(amended February 2011)

If after following the procedure in paragraph 58.17 the official receiver is not in a position to seek the appointment of an insolvency practitioner because he/she does not consider that the contributories are in a position to meet their liabilities without some persuasion, he/she should send a letter requesting payment. The letter to each contributory should inform them that:- 

  1. unless suitable arrangements are made immediately for the payment of sums sufficient to meet his/her liability to contribute to the assets, a formal call will be made;
  2. failure to pay such a call could result in legal proceedings to enforce payment (but the type of proceedings need not be specified at this stage); and
  3. it would be advisable for the contributory to consult with the other contributories to achieve an agreement as to payment

If a reasonable offer to settle part of the liabilities is received, this should be given serious consideration. What constitutes a ‘reasonable offer’ will depend upon the facts of the case. If the official receiver considers the offer  acceptable and the case is one where the winding-up order was made before 6 April 2010, he/she should inform Technical Section who will, if appropriate, sanction the compromise by exercising the Secretary of State’s function as the liquidation committee. The official receiver as liquidator does not need to seek sanction to accept a reasonable settlement offer in cases where the winding-up order was made on or after 6 April 2010.

If, as is likely, no offer is forthcoming, a formal call should be made (see paragraph 58.20 below).

Notes: [s167(1)] [IA schedule 4 para 3(a) for pre 6.4.10 cases and para 6A for post 6.4.10 cases]

58.20 Making a formal call on contributories

The official receiver as liquidator may make a call but only with the sanction of the court or the Secretary of State acting as the liquidation committee. Accordingly the official receiver, if he wishes to make a formal call, should apply to Technical Section for sanction and not to the court. The official receiver should upon receipt of the sanction issue notice to each contributory. It is not necessary to limit the amount claimed, nor should the official receiver have regard to whether or not any person is likely to pay. The call should be made for the whole of each contributory’s liability to contribute to the deficiency. In the unlikely event that more money than necessary is received, there can be a pro rata refund. Where adequate funds are received to enable the appointment of an insolvency practitioner as liquidator, the official receiver should apply to the Secretary of State for such an appointment. Where no such appointment can be sought the official receiver should, before approaching the creditors for funds to launch insolvency proceedings or for their views on using any existing funds for that purpose, apply to the court for an order for payment. The existence of such an order, if not complied with, will be helpful in establishing that a debt is due should insolvency proceedings be pursued against the contributory.

Notes: [s150, s160(1)(d) and (2), s141(4) and R4.202] [R4.205 and Form 4.58][s150(2)][R4.205(2) and Form 4.59 [s80 and s152]

58.21 Disqualification proceedings

(amended August 2012)

The official receiver should report to the Secretary of State on the conduct of those persons responsible for the promotion or management of any entity that can be wound up under Part V of the Insolvency Act 1986. This includes a manager or any other person who has or has had control or management of an EEIG’s business who is regarded as a director for the purposes of the Insolvency Act 1986 (by virtue of Regulations 8(1) and 20 of the European Economic Interest Grouping Regulations 1989). A person who is subject to a disqualification order cannot be a manager of an EEIG (Regulation 20 of the 1989 Regulations). An undischarged bankrupt will commit an offence if he/she acts in the management of a company and the term "company" includes an unregistered company or an oversea company.

Notes: [s22(2)(b) CDDA][Reg 8 and 20][s11 CDDA] [s22(2)(a) CDDA] [s220][s 2(1) and (2), 18 (4), 540 (1) and (4), 548, 738, 1044, 1060 (3), 1121 (2) 1156 (1) to (3), 1165 (7), 1167, 1170 and 1173 (1) CA 2006]


58.22 Reporting of criminal offences

The Insolvency Act 1986 provides that, subject to the provisions of Part V, any unregistered company may be wound up under the Act, and all the provisions of the Act and the Companies Act about winding up apply to an unregistered company subject to the exceptions and additions mentioned. With respect to prosecutions, the exceptions and additions do not detract from the generality of the application of the offences set out in those parts of the Act which deal with the winding up of companies and apply when an unregistered company is wound up under Part V. There are specific provisions which the official receiver needs to consider when making enquiries in relation to offences that may have been committed where certain types of entity are wound up as unregistered companies:-

  1. Registered friendly societies - A registered friendly society is required to keep and preserve proper accounting records under the provisions of Section 68 of the Friendly Societies Act 1992. These provisions are substantially the same as those for a company. There are various offences which may have been committed by the committee of management of the friendly society under both the Friendly Societies Acts 1974 (as amended) and 1992 some of which may also be committed by officers or members of the Friendly Society. If the official receiver considers that an offence may have been committed, he should provide Prosecution Unit at Headquarters with brief details so that the matter can be considered further.
  2. EEIG - The official receiver should note the contents of paragraph 58.10 regarding the failure to file information with the Registrar of Companies. The offences in the Act which can be committed in connection with the winding up of a company can also be committed in relation to the winding up of an EEIG, subject only to Regulation 21 of the 1989 Regulations which provides that nothing in the Regulations shall create any new criminal offence punishable to a greater extent than is permitted under paragraph 1(1)(d) of schedule 2 to the European Communities Act 1972. This may operate to exclude daily default fines in connection with offences committed in relation to an EEIG.
  3. The fraudulent trading provisions apply to an EEIG (Regulation 18 of, and paragraph 12 of schedule 4 to, the 1989 Regulations).

Notes: [S458 CA85][Reg 21][S432 CA 1985 Reg 18 and Sch 4]


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