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How Much Does it Cost to Wind Up a Company?
If you are owed money by a company and have been unable to recover the debt, you may decide to apply to court to wind up the company in order to enforce the repayment. The process can be quite technical and as there are costs involved, it is worth considering options such as:
- Seeking the assistance of a debt specialist, to help you recover the debt
- Issuing a Statutory Demand
- Issuing a CCJ
By issuing a winding up petition (WUP) you are, essentially, saying that the company is unable to pay its debts and so it should be liquidated and proceeds distributed to the creditors. If you feel that you have exhausted your options and you are owed in excess of £750, then you can apply to the court to have the company wound up.
However, the cost of winding up a company through issuing a winding up petition will likely be in the region of £2,000, so this is an option you won’t want to take lightly and should be reserved for larger debts. You can speak to our team to find out whether this is the best option for you.
The wealth of legal and financial qualification across our team ensures that we operate within all of the required legal guidelines while providing cost-effective and timely guidance. Our personable financial experts ensure you are given helpful and relatable advice that keeps you up-to-speed throughout the process. We offer peace of mind at a stressful moment through working to find a financial outcome that satisfies creditors, the government, shareholders and directors whenever possible.
We understand that many companies find themselves insolvent through no fault of the directors, so if circumstances have brought on financial difficulties, we help our clients to find a workable financial solution. If you want to discuss our available insolvency practitioners Bolton services, get in touch with us today. We act on behalf of our clients to find the best possible solution to their current financial difficulties.
Our expert financial staff are available to discuss options surrounding Liquidation, Administration and a range of other services we provide, with this advice offered through a free initial consultation. Additionally, if you are seeking an estimate on the price of a Liquidation process for your company, you can make use of our free quote calculator.
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Four Key Questions on how much does it cost to wind up a company?
What are the specific costs of winding up a company?
Court fee – The winding up petition court fee is £1,880. This is made up of £280 court fees and £1,600 petition deposit to manage the liquidation. You might be able to get the fees back if the company can afford to repay them. If the company is not wound up, for example, if the debtor repays the debt, or is clearly insolvent then the £1600 petition deposit will be repaid.
Process server fee – the average cost of a fixed fee process server is currently around £100 in England and Wales.
Company House search fee – it costs £2 to get accurate debtor details from Companies House.
Advertisement fee – £79.40 plus VAT to advertise the winding up petition in the London Gazette.
Solicitors’ fees – you may choose to instruct a solicitor to act on your behalf and should factor in their fees to issue the petition.
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What does the winding up process involve?
As well as asking how much does it cost to wind up a company? You may also want to know a little bit more about how the process would work for you.
The WUP is issued, served, and then advertised in The Gazette. It is then heard at court, where it is either dismissed or approved. Once it is advertised, other creditors may support the petition, and if the original petitioner is repaid, or seeks to withdraw, other creditors may take it over.
If the petition is approved, the winding up order is made. The company will then be served the order and the official receiver becomes the liquidator. It’s probable that the company may already know that it is coming. You probably have threatened the company with legal action already.
Once the petition arrives at the registered company’s address, the company can either pay the debt or oppose the petition. If the company has a genuine dispute in respect of the debt, and can prove this, the court will not make the order.
The company will no doubt seek advice from a solicitor and/or a licensed insolvency Practitioner (IP). The company may seek to go into creditors’ voluntary liquidation or look at administration or a company voluntary arrangement.
If the company is unable to put a hold on proceedings, the petition is advertised publicly in The Gazette, the main reason for this is so that other creditors can see that the company is insolvent and the company bankers can freeze the bank account. They may then make a claim for their own debt, serving a notice of support on the original petitioner.
If there was no advertisement in The Gazette, the court would not grant a winding up order. The Companies Court Winding Up List is published every week and shows every scheduled hearing. All scheduled winding up petition hearings are heard at court even if creditors have been paid in full by the company beforehand. In this instance the hearing would simply be heard and dismissed.
The advertisement itself is a public document, details the name of the company, its registered address, details of the creditor submitting the WUP, as well as the location and the date of the future hearing. There is also a mention of the appointed solicitor or IP and their address.
Once a petition is advertised the bank will freeze the company’s bank accounts which effectively puts a stop to all trading. The debtor may ask you to delay advertising the petition to give them more time to pay you or to propose a restructuring.
Given the cost of winding up a company, you may want to consider a request that you accept a partial payment in order to withdraw the petition, or their solicitor can request an adjournment which the court may or may not accept. An adjournment can be for up to 90 days. If the company fails to either respond or appeal during the seven business days, the WUP will almost certainly be approved at court and they will issue the order to wind up the company.
The business and assets will then be realised by the official receiver or an appointed Liquidator and this process is known as compulsory liquidation. The Insolvency Service, along with assistance from the Liquidator will investigate the company and its directors to ensure that the company inability to pay the debt was not as a result of fraudulent trading, or wrongdoing on the directors’ part. They will look at transactions over the previous two to five years, to see if they need to be undone.
Any evidence of wrongdoing, is reported to the Insolvency Service and can lead to a fine and/or director disqualification. The directors can also be made personally liable for any debt if a court decides that they acted wrongfully.
If you need further advice about issuing a WUP or any aspect related to the cost of winding up a company, you can call our expert team on 0300 303 8284 to discuss the best course of action for you. Alternatively, contact us online by email or online contact form and we’ll reply as soon as we can with the right company liquidation advice for you.
Our friendly and highly skilled team here at The Insolvency Experts have helped many company Directors to explore processes of debt recovery to help keep their own companies sustainable, as well as looking into winding up their own company through a process of liquidation if the need ever arises.
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