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NOTE: The Insolvency Experts offer financial guidance and representation to companies who are considering or currently going through the Winding Up process. If you are an employee of such a company looking for advice on unpaid wages, you can find this from the UK government by clicking here.
Winding Up Petitions
A winding up petition may be served on your company by any creditor who has a debt of more than £750 that remains unsatisfied.
The petition is filed at Court, before being served on the company.
The document will include details of a hearing date for a court to rule over the decision of placing the company into Compulsory Liquidation.
If the company is placed into Compulsory Liquidation, the period between the presentation of the petition and the date of Liquidation will be subject to detailed review by the Liquidator. Any transactions identified, that are not considered in the best interest of creditors, may be challenged and reversed by the Liquidator.
Any creditor with an unsatisfied debt of more than £750 may present a winding up petition. Once the petition has been served on the company, the petitioner must advertise prior to the hearing date of the petition.
What are the impacts of a Winding Up Petition?
The effects of the advertisement is that the company’s bank account will be frozen, with no funds available to be released without a court application.
With the restrictions on the bank account and scrutiny in respect of any transactions in the period between the date of presentation of the petition, and the date of Liquidation, receipt of a winding up petition will severely impact your company’s ability to trade.
If your company is unable to settle the debt in full, or have reasonable grounds to appeal for the petition to be set aside, then the company will likely be placed into Liquidation at the hearing date.
What options are available ?
There are however a number of options still available to your company, although it is imperative that these are explored immediately upon receipt of the winding up petition, and ideally before the petition is advertised.
If your company finds itself in receipt of a winding up petition, please contact us at The Insolvency Experts in order that we may understand your situation, and provide alternative solutions.
In most cases, the third party that presented the petition will be willing to allow the company to enter into an alternative insolvency/rescue procedure, which gives directors the ability to lead the process, rather than being subject to an onerous, Court governed process.