Winding Up Petition
Winding up Petition Advice For Company Directors & Business Owners
What is a Winding up Petition? To find out watch the video below or scroll to read…
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By the end of this short video you will understand:
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Do you know what a winding up petition is and how bad it is for your company and the consequences for you as a company director as well as your company? If you don’t then better sit down and find out as what you need to do if you been served with a winding up petition.
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Winding up Petition and the Consequences
If you have been issued with a winding up petition for your company because the company owes money. 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 achived with professional advice.
Case Study
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 order
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 made against your company. A considerable time may elapse between the presentation of the petition and the hearing for the making of the order.
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.
Provisional liquidators
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 Next?
The next step is a complimentary 15 minute conversation with UK's Most Trusted Insolvency Auditor. This enables you to learn more about the process and what is involved. The call also allows you to learn more about us and how we can help you.
You will know at the end of the free 15 minute consultation if the chemistry between you and the insolvency auditor is right for you and you want to proceed.
There must be a reason why most people are saying Moe Nawaz is the UK's most trusted Insolvency Auditor.
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