The winding up of a company takes place when its corporate existence is legally dissolved  through a formal process commonly referred to as liquidation. The methods of ending a company’s existence are either a members’ voluntary winding up, a creditors’ voluntary winding up, or a compulsory Court winding up/liquidation.

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The essential feature of a members’ voluntary winding up is that the company must be solvent (i.e. can pay its debts as they fall due) and the members decide to end its existence. The process is commenced in accordance with the Summary Approval Procedure by way of a special resolution as set out in Section 579 of the Companies Act.   Where the company is of a "fixed duration" or a "specific purpose" company an alternative method is by way of ordinary resolution in accordance with Section 580 of the Companies Act. 

A vital element of a members’ voluntary winding-up is the “Declaration of Solvency”. The directors are under a duty to make an accurate Declaration of Solvency (Sections 207 & 579).  The declaration must state the total amount of the company’s assets and liabilities (within the last three month period) and that a full inquiry into the affairs of the company has been carried out by the declarants (directors) who have formed the opinion that the company will be able to pay its debts and other liabilities within the next twelve month period.

The declaration must be drawn up in the correct format and accompanied by a report by a person who is qualified to act as a statutory auditor of the company, who states whether, in his or her opinion, the declaration is not unreasonable.  

Details of the process and the statutory filing requirements are available on the CRO website.

A company may be wound up voluntarily as a creditors’ voluntary winding-up where the following circumstances occur:

•   the members of the company in general meeting resolve that the company cannot by reason of its liabilities continue its business and that it be wound up as a creditors’ voluntary liquidation and a creditors meeting is held;

•   a members’ voluntary liquidation is converted to a creditors voluntary liquidation (see preceding paragraph); or

•   where a declaration in relation to a members voluntary winding-up is not made in accordance with the relevant provisions of the Companies act.

In the first set of circumstances as outlined above, a liquidator is usually appointed at the members’ meeting and the company calls a meeting of its creditors for the day on, or the day after, the winding-up resolution is proposed. The company must advertise the creditors meeting, once at least in two daily newspapers circulating in the district where the registered office or principal place of business of the company is situated, and give at least ten days’ notice. 

The principal difference between a members’ and a creditors’ voluntary winding up is that the creditors can choose the liquidator.  The directors must prepare and present to the meeting a full statement of the company’s affairs, together with a list of the creditors and the estimated amounts of their claims. The liquidator will call any subsequent meetings and will present his final account before the final meeting of members and creditors.

A Court can order the winding-up of a company on various grounds (Section 569 - Companies Act 2014) including:

 •   where the company has by special resolution resolved that the company be wound up by the Court;

 •   where the company has not commenced business within one year of incorporation or suspends its business for a whole year;

 •   where the members of the company are all deceased and no longer exist;

 •   where the company is unable to pay its debts;

 •   where the Court is of the opinion that it is just and equitable that the company should be wound up;

 •   where the company’s affairs are being conducted, or the powers of the directors are being exercised, in a manner oppressive to any member or in disregard to their interests as a member;

 •   where the Court is satisfied, on a petition of the Director, that it is in the public interest that the company should be wound up.

 A range of parties can petition the High Court for the appointment of a liquidator, including:- the company itself, any creditor of the company, members or persons required to contribute to the assets.  The petition must be advertised.

Details of the process and the statutory filing requirements are available on the CRO website.

A company is deemed to be unable to pay its debts in a number of circumstances including, where:

(a)  a creditor to whom the company is indebted in a sum exceeding €50,000 (temporary amendment to address issues created by Covid-19) has served a written demand on the company at its registered office to pay the sum due and the company has for 21 days failed to pay the sum due or to secure or compound for it to the reasonable satisfaction of the creditors; or

(b) if two or more creditors whom the company is indebted in a sum exceeding €50,000 (temporary amendment to address issues created by Covid-19) have served a written demand on the company at its registered office to pay the sum due and the company has for 21 days failed to pay the sum due or to secure or compound for it to the reasonable satisfaction of the creditors; or

(c)  if execution or other process issued on a judgment, decree or order of any Court in favour of a creditor of the company is returned unsatisfied in whole or in part; or

(d) if it is proven to the satisfaction of the Court that the company is unable to pay its debts.

Temporary measures have been put into legislation to address issues created by Covid-19. During the interim period meetings of creditors, liquidators, members and contributor may be held using electronic communications technology.

Such meetings may be held:

• wholly or partly using electronic communication technology with no need for a physical venue provided all relevant attendees have a reasonable opportunity to participate in the meeting;
• where the relevant person provides or facilitates with the use of electronic communication technology including a mechanism for casting votes before or during the meeting;
• with proportionate restriction to ensure identification of attendees and security of the electronic communication technology to reduce the risk of data corruption and illegal access and certainty as to the source;
• where a vote on resolutions is taken by a show of hands of relevant attendees provided the identity can be verified.

Notice of the meetings to be held using electronic communications technology must state:

• the electronic platform to be used;
• details for access to the electronic platform;
• timeframe for confirmation of attendance;
• any restriction in place in order to identify attendees;
• procedure for asking questions; and
• procedure for voting.

A liquidator is the person appointed to wind up a company.   Their principal function is to dispose of the company’s assets, pay or settle its debts and distribute any surplus to its members. When a company is in liquidation, the liquidator usually takes over the powers of the directors.

A receiver is a person appointed by the Court to sell a particular company asset on behalf of a lender who was promised the asset as collateral against a loan. In receivership, the company’s powers and the authority of its directors are suspended in relation to the assets affected by the receivership.

An examiner is a person appointed to a company by the Court to assess the company’s position and prepare a rescue plan for the company

Examinership is a process whereby a company can be placed under the protection of the Court for a period of about 70 days.  Essentially it allows a company with a reasonable prospect of survival "protection from its creditors" for a limited period to restructure the business with the approval of the Court.

During that period:

 ·         a liquidator or receiver cannot be appointed to the company;

 ·         creditors cannot act to recover their debts without the court’s consent; and

 ·         no one can take legal proceedings against the company without the court’s consent.