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A winding up order is a very serious action taken by a creditor of an insolvent company. You will need to enlist the help of an insolvency expert who can help your company deal with their financial issues and respond to the order in the best way possible.
At The Insolvency Experts, we are highly experienced and have helped plenty of clients return to solvency or if they choose to, liquidate their company in the correct manner. We can guide businesses through the complexities of a winding up order and how you can deal with one.
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What is a winding up order?
A winding up order is the final stage of a winding up petition and is granted by the courts to place a company into compulsory liquidation.
This order is typically used when a creditor has exhausted all other options and needs to recover a large amount of debt from an insolvent company. It is normally larger creditors, such as HMRC, that use this method to recover debt, as it can be a costly process.
A winding up petition has to be issued and accepted by the courts before a winding up order can be granted and enforced.
Who can issue a winding up order?
Any company creditor can issue a winding up petition, but only the courts can issue a winding up order. Creditors can instigate the process by issuing a petition and then, usually through asking a legal team, can apply to issue a compulsory winding up order with permission from the courts.
In order for a creditor to apply for a winding up order to be issued, they must ensure that:
- The debt that they are seeking to collect exceeds £750
- They have previously sent a 21 day Statutory Demand and had no response
- A winding up petition has been filed
What happens once a winding up order is made?
Once a winding up order is granted by the courts, they will appoint an Official Receiver (OR) who will be in charge of liquidating the company’s assets and using the funds to repay creditors.
The rest of the compulsory liquidation procedure will follow, with the company being wound up and struck off the official register at Companies House. This is a non-negotiable process, so it’s important that you contact a professional insolvency practitioner immediately if you are issued with a winding up petition, before an order is enforced.
During this process, the insolvent company directors may be subject to investigation in order to establish the causes of the company’s financial troubles and rule out any instances of wrongful trading.
How do I stop a winding up order?
Once a winding up order is issued, you have very little options left. That is why it is important to act quickly if a winding up petition is served against your company.
If you want to stop a winding up order, there must be adequate reasons to state that it was either wrongfully issued or that you weren’t correctly notified. You can:
- Apply to have the order rescinded
You will have to have sufficient evidence to prove that your company was not properly notified of the winding up petition or statutory demand, or evidence that your company circumstances have changed significantly since the petition was issued.
- Apply for the liquidation to be stayed
This is an order, usually by the Official Receiver, given to ‘stay’ the liquidation proceedings either permanently or temporarily.
- Appeal the order all together
This is possible, but the chances of this happening are very slim. A winding up order can only be appealed if there is clear evidence to suggest that the decision made by the creditor was unjust due to serious errors.
Your best option is to contact an insolvency practitioner immediately upon the issue of a winding up petition. This way, you have more chances of working out a payment plan or appealing the petition and saving your company from compulsory liquidation.
What is the difference between a winding up order and a winding up petition?
A winding up petition is a legal statement of intent from a creditor, detailing their intent to force a company into closure. A winding up order is the official proceedings being granted by the courts and is the final steps towards closing a company.
A winding up petition comes first, but it cannot be enforced until a winding up order has been granted, typically 7 days after the initial petition has been served,
Does a winding up order need to be published in The Gazette?
In order to obtain a winding up order, a winding up petition must be advertised in The Gazette. This notifies creditors, lenders and the public about a company’s financial situation.
Once the petition has been advertised, a winding up order can then be feasibly granted by the courts.
Winding up proceedings and COVID-19
The COVID-19 pandemic has affected the way that all winding up proceedings work. The issuing of winding up petitions, winding up orders and statutory demands have been temporarily suspended.
This suspension is due to be lifted on 30th June 2021. Although this is subject to change, you should prepare for this should your company be at risk of receiving a winding up order. If you are worried about the suspension expiring, contact us today for expert guidance on your next steps.
Winding up order legal advice
The most important thing you can do if you are dealing with a winding up order, is to contact an insolvency professional immediately, preferably before an order is issued.
Our experts can help you to deal with your company’s financial issues and create a plan to stop liquidation proceedings from happening.
If you have been issued a winding up order or are concerned about the potential of this happening, contact us by calling 01204 208 162 or emailing email@example.com to find out more about your options.