Stop a Winding-Up Petition from Closing Your Company
My company is facing a winding up petition, what can I do?
First of all, don’t panic. Secondly, contact us without delay as a winding up petition is a very serious matter and there could be personal liability consequences for anything you do from here onwards, but read on as this may give you some comfort.
If you have been served with a winding up petition your company is clearly insolvent or there has been a terrible mistake. Whilst it may be a mistake in your eyes (for example you might be working every waking hour to make money to pay your debts) you can only stop your company being wound up by paying off the petition, attempting to convince the court your company should not be wound up or by entering into an alternative formal insolvency process that will overrule the winding up.
HMRC winding up petitions are the most common winding up petitions you will see. We deal with a large number of these and know how to quickly and simply put you in the best possible position, but contacting us early is essential to ensure your options are not limited.
What is winding up?
Winding up is a term used to describe the process to liquidate a company. A winding up petition is a document issued to commence a court process of putting your company into liquidation. It is most commonly used by creditors owed more than £750, but it can be used by shareholders or directors although this is less common.
Are winding up orders and winding up petitions the same thing?
No, a winding up order means a court has made an order to immediately place the company into liquidation. A winding up petition means someone has started the court process to place your company into liquidation – it is not yet in liquidation and is still a live company, but the consequences of a petition mean it could put it into liquidation very quickly if you don’t take urgent action.
What happens once a winding up petition is issued?
It will be sent to (served upon) your registered office, this is likely to be the first you will know about it. The petition will state the date that the winding up hearing will be held in court to decide whether your company should be placed into compulsory liquidation.
Somewhere between 7 business days after receiving the petition and 7 business days before the hearing, the petition will be advertised in the London Gazette. At this point, your bank account will be frozen and no payments will be allowed out by your bank unless you obtain a validation order from the court. Once your account is frozen the business will face serious cash flow issues very soon after. You must contact us and take action as soon as you receive the petition, delay will mean the end of your business.
At the hearing that follows your company will be placed into liquidation unless the court is convinced there is a good reason not to. This is not straightforward and you should never attend the hearing unprepared, unrepresented or without having sought advice.
What can I do to prevent a winding-up petition?
You must act quickly but carefully. What you should do depends on your circumstances. For expert advice, with 40 years’ combined experience, contact one of our insolvency practitioners (free of charge) today who will help guide you and your business out of trouble.
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