What is a Winding Up Petition?
A winding up petition is a legal notice issued by the companies court or county court by a creditor. The creditor petitions to the court if they are owed more than £750 and it has not been paid for more than 21 days.
The petition is presented at court where a judge will hear the case. If the debts remain outstanding, the creditor (often HMRC) will make an application to the courts to have the company compulsorily wound up.
A winding-up petition cannot be presented against a company based on a demand that was served between 1 March 2020 and 30 June 2021, nor present a winding-up petition between 1 March 2020 and 30 June 2021 based on the company’s inability to pay its debts unless you have reasonable grounds for believing COVID-19 has not had a financial effect on the company or the debt issues would have arisen anyway.
Update June 2021
Regulations are set to be laid that will mean restrictions on statutory demands and winding up petitions will remain for a further three months until 30 September 2021 to protect companies from creditor enforcement action where their debts relate to the pandemic. More information can be found here on The United Kingdom Governments extends business support measures page.
Have you been Served with a Winding Up Petition?
If you have been served with a notice to wind up by one of your creditors or HMRC, they are trying to petition for compulsory winding up of your business as it is unable to pay its debts.
This is by far the most serious action that can be taken against your company and it is often preceded by a statutory demand or seven day letter.
So what can be done about it? Often the company has broken any trust the creditor had, payment deals have failed, cheques have bounced and generally, directors have not kept their word to pay. Even though your company may have tried very hard to meet payment deadlines, your customers have been slow to pay, or sales have been lower than planned.
Act quickly if your business has received a Winding Up Petition
Debts can mount and often we think that if we ignore them they may go away, but that isn’t the case. It could be that your business is owed money but, no matter what you do you can’t seem to get paid and so you’re in a vicious circle that will leave you stressed and extremely worried.
Within just a matter of days of the court logging notice of a petition, it will be printed in the London Gazette which will alert all of your other creditors and allow them to “join” the pleading and possibly spur them to further act themselves. Your bank account is likely to be frozen, which will just add to the difficulty the business is in.
This will cause numerous problems for you and your business so it is imperative that you speak with a professional as quickly as possible.
How we can help to stop a Winding Up Petition
We will immediately seek to protect you from this aggressive recovery method by seeking consent from your creditors for a “stay or an adjournment” of the action. If we can’t get consent for an adjournment, we will represent you in court and either defend the action and seek costs from the other side or seek a formal adjournment while a solution is proposed and agreed.
We can either resolve the claim by way of negotiation using our dispute resolution service or more formally look to restructure the business by way of a Company Voluntary Arrangement – CVA, Administration or Liquidation.
It is possible to stop a petition, but it needs very urgent action. The WUP can be advertised in The Gazette seven days after service and it really is wise to deal with it before this happens. Once it is advertised, it can still be addressed. However, once advertised banks and credit reference agencies will pickup on it. As soon as the company’s bank is aware of the petition, they will freeze the company’s bank account with further trading is practically impossible.
Settle or Compromise the Debt
If you cannot settle the debt try to make an offer to the creditor which includes a sizeable initial payment and also agree to settle their costs. It is likely (but not certain) that the creditor will agree to withdraw the petition on this basis. If the petition has been presented by HM Revenue and Customs they will require the debt to be settled in full before the petition is advertised.
Request an Adjournment
If your limited company registered in England and Wales the hearing and proceedings will more that likely take place at The Stand High Court in London.
Unless the creditor agrees to an adjournment of the hearing of the petition, you will need to attend court at the hearing to request an adjournment. It is recommended that you appoint and instruct a barrister to attend with you.
It is now possible to instruct barristers direct, and if you give us a call we can help with this. The judge will need to be persuaded there is a good reason for the adjournment.
If your business needs more time to raise the money, then it is recommended you provide the court with evidence that refinancing or raising the money is a viable option.
Bank Accounts will be Frozen
Winding up petitions are advertised in the gazette with a hearing date, the banks are likely to freeze the company’s bank account. This is to prevent money being withdrawn from the account, which could lead to potential claims being made against the bank in any subsequent liquidation. Banks will usually take the approach of freezing all the accounts the company holds.
Compulsory liquidation is a very public process as its advertised in the gazette due to being a matter of public knowledge that the company’s creditors have forced it into liquidation.
A Court Hearing of the Petition For a Winding Up Order
The Judge will hear the petition and if the company cannot pay and there is no evidence or defence that it can pay in the future then the Judge will issue a winding up order.
Once this has happened the Official Receiver will act on the court order and start the process of liquidating the company and dealing with the company’s assets. Directors are required by law to comply to any requests for information and records by the Official Receiver or an appointed liquidator. Failure to do so, is a criminal offence
Once a company has been ordered to be wound up by the court, the Official Receiver or the appointed liquidator must investigate the activities of the company directors to ensure that they have acted properly and according to their legal and “fiduciary” duties.
If the liquidator will carryout an investigation in to the company and the directors conduct. Should the licensed insolvency practitioner believe that a director is guilty of wrongful trading they may recommend that any directors are banned from all current and future directorships for a period of time up to 15 years;
Winding Up Petition Help
We know it will be difficult for you to pick up the phone and talk to someone or even to know who to trust that is why we offer winding up petition help and advice. No matter whether your business is large or small we can help and advise you. You can trust us for quick, straightforward,, impartial and professional, free confidential advice that will enable you to get your business back on track.
If you have received this type of legal document you probably don’t know which way to turn, which is why you are here. Our team of friendly and trusted experts are here to help you with the process and will guide you through what a winding up petition is whilst also ensuring that your business gets through the difficult time ahead.
We will provide free winding up petition help and advice on the phone and it is looks like we can help with an insolvency process such as a voluntary liquidation please feel free to call us.
We will then provide an accurate estimate of the likely costs involved.
F.A.Q’s
What is a winding up petition on a company
A winding up petition of a company is a request to the courts to allow a creditor to force a compulsory liquidation on the business due to none payment of its debts.
Advertisement of winding up petition
The advertisement of winding up petition is published in the Gazette, formally known as The London gazette
Unadvertised petition to wind up
unadvertised petition to wind up are not shown in the gazette, but do show on the businesses credit file.
Petition for compulsory winding up
If a creditors wished to file for a petition for compulsory winding up, they will first need to issues a statutory demand, seven day letter or a CCJ first, this is then followed up with a winding up petition that is served on the registered office.
