On application the Court may, at any time after a winding up
order has been made, make an order for winding up proceedings to be
stayed for a period or stopped altogether.
The application may be made by
The Court may require the Official Receiver to make a report of
the facts which are relevant to the application before making any
order.
In England and Wales an application is made under s. 147 IA
1986. Although it is not explicitly provided the court may exercise
a similar power under s. 112 in respect of voluntary
liquidations.
The fact that the winding up process was commenced will still be
visible on the company’s file at Companies House. In all
other respects the effect of a permanent stay will be to render the
winding up inoperative and to reinstate the company to the position
it was in prior to the commencement of the winding up. Generally
the liquidator will be entitled to his release, the directors will
regain their powers and the company will be able to trade.
A stay may have tax consequences; for example a distribution
to shareholders may be treated as capital or income depending on
whether a liquidation has been stayed. If in doubt seek the
appropriate technical advice.
If a company was wound-up by order of the court, an application
for rescission can be made within 7 days of the winding up order,
in accordance with Insolvency Rule 7.47(4) and paragraph 7.1 of the
Insolvency Practice Direction. The court has the power to rescind
the winding up order and declare it a nullity.
Notice of such action must be given to the Official
Receiver.
The applications can be made by a creditor, a contributory
or by the company jointly with a creditor or contributory. The
application must be supported by written evidence of assets and
liabilities.
The 7 day limit can be waived/extended by the Court at its
discretion if it is prepared to hear the application at any time
after 7 days.
In the event of an unsuccessful application, the costs of
the petitioning creditor, the supporting creditor and the OR will
normally be ordered to be paid by the creditor or contributory
making or joining the application.
