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WINDING UP PETITIONS – ACTING FOR CREDITORS

If a company owes a debt of more than £750, one or more of the company’s creditors may petition the court for the winding up of that company. The winding up petition asks the court to wind the company up on the basis that it is unable to pay its debts or that its liabilities are greater than its assets.

The petition must be served on the company at their registered office address and must also be advertised in accordance with the Insolvency Act 1986 and Insolvency Rules. Typically, this will be not less than 7 days after the petition has been served, and not less than 7 days before the hearing. This gives other creditors of the company (if there are any) the opportunity to support the petition and also for the debtor to negotiate or make payment. The petition will usually be endorsed with a hearing date of approximately 7 weeks following the issue of the petition.

It is important to note that winding up petitions whilst typically used in these circumstances must not be used as purely a debt collection method. However, this can often be a fine line to tread and there is need for expert guidance to ensure that a petitioner does not fall foul of the rules leaving themselves exposed. Further, there is a strict requirement that the debt is a liquidated debt and that this is not disputed.

This a specialised and technical area of insolvency law, and therefore it is important to seek the assistance of experienced and knowledgeable experts. Hallmark Solicitors are specialist corporate and insolvency lawyers and deal with winding up petitions in the various UK insolvency centres throughout the UK.

We are able to provide expert assistance and guidance through the vagaries of the process including assisting in situations where the debt becomes disputed and a trial of the issues is required to determine whether the debt is disputed on genuine grounds. We are fast and proactive and are in regulation communication with the courts. We are commercial aware and driven by a desire to obtain good results for our clients.

WINDING UP PETITIONS – ACTING FOR DEBTORS

We possess an all-round and broad-based expertise to act from both sides of the court. Our expertise and experience in insolvency matters is second to none and we regularly in assist companies in receipt of a winding up petitions.

If a winding up petition is issued then the debtor company has very limited time in which to act. The company has 7 days to either pay the debt in full, engage with their creditor to question the validity of the debt or enter into an arrangement.

After the petition is issued you have a few options to consider, but regardless of the course of action you choose to pursue, it must be done without hesitation; if the Court grants the winding up order it will be too late.

After a winding up petition is presented to the court, and the court subsequently accepts it, a copy will be sent to the company. The next practical stage is advertising the winding up petition. This involves an advertisement being placed in a publication known as the London Gazette. A creditor must wait at least 7 days after the petition is issued before placing the advertisement. If a petition has not yet been advertised then it may be possible to restrain advertisement of the petition by using an injunction. This demonstrates to act straight away upon the receipt of a winding up petition.

Once a petition is advertised then it is not uncommon for banks to freeze the bank accounts of the company to prevent the directors from disposing of assets illegally.

If the court grants a winding up order, then a Receiver will be appointed to act in respect of the affairs of the insolvent company. At this point there is little or nothing that can be done to prevent the company being liquidated unless you chose to apply for a rescission of the Winding Up. This will have to be done within 7 days of the winding up order.

Following the grant of a winding up order, the Receiver may also investigate the previous actions of the directors to see if they have engaged in acts of wrongful trading, in which case they can be held personally liable for some of the debts of the company.

If you have received a winding up petition, then call us straight away for a fast assessment of your matter.

With our Head Office based in Hull and two Consulting Offices in London and Leeds we are easily accessible for consultations. Call us on 01482 616 616 or 0800 037 1305 to book a free telephone consultation to discuss your issues and requirements.