A creditor can ask the Court to issue a wind up petition to a partnership or company if they have not received payment of a debt owed. The preceding Statutory Demand is issued by the creditor themselves and 21 days must pass before they ask the court to issue the winding up petition.
As the creditor will have to pay for the court to do this, winding up petitions are usually used as a last resort by creditors, or as a strong-arm technique to get a bigger bill paid quickly. The costs of the winding up order (approximately £1,800) are usually added on to the debtor’s bill by the creditor.
What happens now?
If you have received a Statutory Demand, you have 21 days to dispute the demand and have it set aside, or to come to an agreement with the creditor over payment. After 21 days, the creditor can ask the court to issue a winding up petition.
The winding up petition will let you know the date and time of the court hearing, and the court at which it is being held. Once the winding up petition has been served, you have ten days to settle the debt, or have a repayment plan accepted by the creditor, before the petition is advertised in the London Gazette.
The London Gazette is a published daily, in print and online and is fully accessible to the public. It is very common for your bank account to be frozen and your phone service to be disconnected once the London Gazette advertisement appears. There is also the likelihood that your other creditors will withdraw credit facilities, make their own demands for payment and even join the court action.
The creditor can withdraw the petition if paid in full, or offered a agreeable repayment plan, but this is far more likely to happen early on in the process. If the creditor has had to pay to issue a winding up petition, this cost will be added to your debt.
What action can I take?
If you have received a winding up petition, seek professional advice immediately. A law professional or an Insolvency Practitioner will be able to give you advice on the best course of action for your set of circumstances.
You have the option of asking a solicitor to appear at the Court to secure an adjournment in order to allow you more time to raise funds or take control of the dissolution yourself through a formal arrangement such as a Company Voluntary Arrangement (CVA) or a Creditor’s Voluntary Liquidation (CVL) . The paperwork received with the petition will let you know the date and the court where the hearing is taking place.
How can McAlister & Co help if I’ve received a Statutory Demand?
If you have received a Statutory Demand, you contact McAlister & Co and speak to our licensed Insolvency Practitioners, Sandra McAlister and Simon Barriball, who will be able to offer you free and confidential initial advice.
We can take a look at your company financial situation as a whole and advise you of the options available to you. It may be that your creditor is a single creditor employing overly-aggressive recovery techniques, or it may be that the Statutory Demand is a red flag that your company is heading towards insolvency. If this is the case, we can offer advice and oversee a business recovery plan, such as an Administration, or if the company is insolvent, we can act help you to protect your assets and ‘ring fence’ the company before placing it into a recovery or a liquidation plan.
How can McAlister & Co help if I’ve received a Winding-Up Petition?
If you’ve received a Winding Up Petition, call McAlister & Co immediately to speak with our Insolvency Practitioners, Sandra McAlister and Simon Barriball.
We can put processes into action to protect your assets and ‘ring fence’ the company before further action is taken. We can attend the court hearing on your behalf to adjourn the winding up process and take control of the liquidation of the company, allowing the dissolution to occur with a better outcome for you.
How can a CVA help if I’ve received a Statutory Demand or Winding Up Petition?
A Company Voluntary Arrangement is an agreement with your creditors to pay them out of future profits and is an effective business turnaround tool.
In order for a CVA to be accepted by your creditors, we work with you to demonstrate that the company is a viable business that can return to profitability and repay it’s debts.
How can a CVL help if I’ve received a Statutory Demand or Winding Up Petition?
If it is the case that the company is no longer viable – that is that is insolvent and unlikely to make future profits, then a CVL can be the best way forward. A CVL is a straightforward process that dissolves the company and distributes its assets amongst the creditors.
The company will still be dissolved, but in a much more managed way than if you were to simply allow the winding up process to go ahead. Directors of companies dissolved by the Court must attend interviews and hand over the company books to the Official Receiver for a thorough investigation into the possibility of personal liability and criminal wrongdoing.
In a CVL, the appointed Insolvency Practitioner is responsible for investigating the company and reporting any fraudulent behaviour.
Are there any other options open to me if I have received a Winding Up Petition?
Each situation is unique and whereas we usually recommend the CVA and CVL routes if a company has received a Windup Up Petition, there may be other appropriate options.
Call McAlister & Co to discuss your specific situation; we are here to listen and to help with free, confidential and immediate advice.