A compulsory liquidation occurs when one (or more) of the creditors petitions to the court to liquidate the company. The aim is that all of the assets can be sold and the proceeds used to repay outstanding debts.
To issue a "petition" a creditor must be owed more than £750, which remains unpaid after a formal payment demand or an unpaid Country Court Judgement.
The Insolvency Service will also investigate the actions of the directors prior to the liquidation. After the liquidation the company will be struck off.