UK company law- liquidation

Timber Plc carries on a varied timber processing business. Pine Ltd regularly supplies it with pine logs, some of which Timber Plc uses in the manufacture of furniture, the less suitable parts of which it cuts into stakes to be sold for fencing.

Pine Ltd supplies the logs under contracts providing that ownership of all wood supplied to Timber Plc and its products shall remain in Pine Ltd and all monies received for the sale of such wood and products held on trust for Pine Ltd exclusively until all debts due from Timber Plc have been discharged.

David (Timber Plc's managing director Edwin's brother) regularly supplies Timber Plc with metal rods, which Timber Plc uses to strenghten items of furniture manufactured by it.

Five months ago, Rory, a retailer and purchaser of furniture from Timber Plc, obtained judgement against Timber Plc for 50,000 damages for losses suffered by Rory inconsequence of furniture supplied to Rory by Timber Plc, the furniture being defective because some of the rods in it were corroded.

In order to pay the damages, Timber Plc needs to increase its profits, but David refuses to continue supplying steel rods unless Timber Plc pays 5,000 for rods already supplied and pays in advance for future deliveries, which Timber Plc is unable to do so.

While Edwin and his secretary Freda are on holidays, another of Timber's directors, George, persuades David to continue supplies on the condition that Timber Plc grants Davida fixed charge over its sawmill for monies owed up to 20,000.

However, the news of Rory's action against Timbrt Plc causes its trade to dwindle.

In the last six months, none of the directors or their secretaries have been paid, nor has the annual divident which was declared three months ago.

A creditor petitions for compulsory winding up and a liquidator is appointed.

Advise the liquidator on how shall he proceed with the liquidations, which law shall be relied upon and who will have the claim for the debts first, and what will remain of the company, how shall this proceed?