That is certainly true for the vast majority of liquidations. However, it is possible to stop a liquidation and return a company to the control of its directors. Section 147 of the Insolvency Act 1986 allows the court, after a winding up order has been granted, to make an order permanently sisting the liquidation. A permanent sist is a rather clumsy expression but the practical effect is that the company comes out of liquidation and back into the hands of its directors.
The court has discretion in awarding a permanent sist. The legislation provides little guidance on where the court will grant a permanent sist but, generally speaking, there are a few points that court will need to be satisfied about before a permanent sist is granted. Firstly, the court will need to be convinced that the company's creditors will not be left out of pocket by a permanent sist. There will need to be proposals to pay all of the company's creditors in full. The company's creditors are obviously in a strong negotiating position in relation to the debts owed to them so it there is unlikely to be scope for negotiation about reducing the amount of the debts.
Second, the court will consider the liquidator's interest. The liquidator's fees and outlays will also need to be met.
Finally, the court will take into account the public interest. This means that the court will need to consider if it is appropriate for the company to be returned to its directors. If there is suggestion of shady dealings or extremely poor management of the company, a court is likely to consider that it is not in the public interest to grant the permanent sist. For example, if there have been many attempts by creditors to wind up the company that may suggest to the court that the management of the company's finances is very poor and that the company's creditors are suffering as a result. In these circumstances, the court may be reluctant to grant a permanent sist.
A winding up order in most cases signals the end of the company. However, if all the company's creditors and the liquidator can be paid in full, there is likely to be prospects of stopping a liquidation in its tracks.