What is A Winding Up Petition & How to Stop Winding Up Petition?
It is important that you understand the seriousness of a Winding Up Petition and the consequences it can have on YOU the director and the company before you try and stop the winding up petition and the costs associated with it. If you don’t then it might be wise sit down for a few minutes and find out what you need to do if you been served with a winding up petition for your company.
Some common questions are answered first before you proceed any further with the process. Watch the short video below and see what your options might be or carry on reading below.
Why have I been issued a winding up petition?
Success in any business is not easy and without head aches. But sometimes even the most successful businesses face cash flow problems which could eventually lead to their undoing. This could be anything from bad debt due to the recession right through to competing businesses. If a business owes money to its creditors and does not take the necessary steps to resolve any outstanding issues, the creditor may be faced to issue a winding up petition via the courts.
Winding up petition and the consequences
If you have been issued with a winding up petition against your company from a creditor because of unpaid invoices. You can pay the money owed before the court date and get the case dropped or fight it if you believe it to be worth defending. On the other hand if you do nothing and the debt is not paid following the presentation of the petition, then the court will make a winding up order (“the order”) against your company. As it’s a court led procedure, various rules come into play once the petition has been presented. The presentation of a petition has serious consequences for the directors and the company, but before we go any further let me give you a case study of what can be achieved with professional advice from myself and my team.
For FREE & Confidential advice call me on Tel: 0800 24 0800 and I will help you with you petition.
Case Study for better understanding
Company “A” had 38 retail stores selling household furniture with sales declining daily and unable to pay its bill as they fell. The company was presented with a winding up petition due to unpaid Inland Revenue and VAT debts. The company had a combination of freehold and leasehold stores in prime retail sites across the country. The company employed a workforce of 260 people on its payroll. A final decision had been made to place the company into Administration before the petition date for this we needed permission of the courts which we obtained on the grounds that there was a better chance of greater dividends going down the administration route than the winding up and compulsory liquidation route for all the creditors and the employees of the company. The courts accepted the plan and gave us 6 weeks to come back and report further progress. Within the 6 week period deep cuts were made to staffing numbers and closure of stores that were not profitable. 11 stores were kept and the rest were sold or leases terminated, the 11 stores were the ones that were making good profits and allowed the company to grow without the losses which it had been getting every trading day before the administration order. By the time we had restructured the company the creditors all agreed to accept £0.40p in every pound owed which allowed the company to continue trading more profitably. The above case demonstrates what can be achieved if experts are brought into the picture earlier rather than later on in the winding up process. Now back to further information about winding up petitions and some of the consequences.
The presentation of a petition has serious consequences for the viability of your company and these are detailed below:
Protection of assets between winding up petition and court hearing date
Once the petition has been presented, a date is set for a court hearing at which the petition will be heard and a winding up order may be made against your company. A considerable time may elapse between the presentation of the petition and the hearing for the making of the order. In general, your company should be allowed to continue to trade in that period but the creditors need to be protected against possible disposal of its assets. Your actions as a director are therefore under great scrutiny in this period of time and the ability to trade effectively can be impaired due to the impending hearing being at the forefront of your mind. Any time after the winding up petition has been issued it will also get advertised in the London Gazette where your bank and other creditors will also see it and a very high chance the company bank accounts will be frozen making it difficult to trade.
Invalidation of disposal of assets
Unless the court orders otherwise, any disposal of your company’s property, alteration in the status of its members or transfer of shares after the commencement of the winding up is void. The purpose of this provision is to preserve the value of the assets of a company for the benefit of persons interested in those assets for the creditors.
At any time after the presentation of the winding up petition the court may appoint the Official Receiver or an insolvency practitioner to be the provisional liquidator of the company. The primary reason for such appointment is usually to safeguard the assets pending the winding up hearing. Since an appointment anticipates the making of a winding-up order this appointment is usually made only with the consent of the company itself or in a clear case of insolvency. Compulsory liquidation takes away control from you as a director of the company and it is important for you to take control of the situation and be in control of your own destiny.
What will be the Next Step?
We understand that as a business owner you have worked day and night to ensure your business is successful. But sometimes even the most successful businesses owners face situations which are outside of their controls like the recession, the banks not being helpful right through to a client who might have left you with a bad debts.
Good news is even at this late stage in time you have options:
- Stop the winding up petition
- Stop Creditors hassling you
- Start a New Company
- For your own piece of mind just Google my name “Moe Nawaz” and see how many people I have helped and what they say about me.
For FREE & Confidential advice call me on Tel: 0800 24 0800 and I let’s see how we can help you stop the petition.