Sometimes businesses run into financial trouble. These problems can often be rectified by negotiating with creditors directly, finding fresh capital or by going into voluntary administration for a short period of time.
Although in some cases a creditor will issue a winding up petition.
For any businesses this can be a stressful and frightening time but if you are issued with a winding up petition then you need to get a solicitor and you need to act on this matter quickly.
Who Issues Winding Up Petitions?
The majority of winding up petitions come from tax issues so HMRC account for around 60% of all petitions. That being said, any creditor that is owed over £750 can ask a legal professional to issue a winding up order to a company – although the debt in question must not be a disputed payment.
The process involves a solicitor asking the Court to issue the petition to the company and if successful it essentially takes control away from the directors of the business.
The Winding Up Process
If the winding up petition is granted then you lose control of your company. You will not be able to put your business in voluntary liquidation, go into administration nor can you sell any company assets to raise capital.
There is a 7 day period from the winding up order being issued and when it can be advertised in the London Gazette which is monitored by major financial institutions and banks. This generally does have a severely adverse effect on the business and often leads to bank accounts being frozen.
Indeed, the official receiver will now be in charge the of the company and their job is to ensure that creditors get as much of their money back as possible whether this means laying off staff, selling company assets or winding up the company altogether.
Your Options As A Company Director
If a winding up petition is issued then you have very little control as a director. There will be a report on the conduct of all directors involved in the company that is sent to the Insolvency Service so there is a threat of possible disqualification from holding a directorship in the future.
Should your business be issued an order then you need to contact a legal professional right away. Time is precious in these circumstances and it isn't a scenario that is going to disappear.
Before a liquidator comes into to dismantle the business after a petition is issued you do have options that include paying the debt or going into administration to work out a deal with your creditors. However you need to act quickly and consult a qualified solicitor before you can go down any of these routes.
If you dispute the debt is owing, it is possible to obtain an Injunction against the Winding Up Petition being advertised. This would need to be dealt with urgently so if a Winding Up Petition is served on your company and you have grounds to dispute the debt then seek immediate legal advice.
Having a winding up petition issued to your business can spell the end of your company but with quick action and an experienced legal professional on your side you can give yourself the best possible chance of keeping your business and paying your creditors.
To speak with a solicitor today call 02077925649 or email This email address is being protected from spambots. You need JavaScript enabled to view it.
