Stop Winding Up Petition

If your company is struggling to pay its creditors’ invoices when due those creditors will no doubt be exerting varying degrees of pressure on you to settle them. A number may have threatened or even started to take some form of legal action.

It only requires one of those creditors to loose patience with your insolvent company and decide to try to wind up your company to recover all or some of what you owe them. To do so, it can serve your company with a winding-up petition which will state, amongst other things, the date of the court hearing. Seven days after this has been delivered to you or shortly thereafter, an advertisement will appear in the London Gazette about the petition. If your bank hears about this they will freeze the bank account making it very difficult to trade.

The creditor will need to prove to the court that your business is no longer in a position to repay its liabilities. As proof, that creditor would have made a Statutory Demand for what they are owed and your company would have been given 21 days to pay it or, instead, have made some other arrangement to settle the debt that the creditor was agreeable to.

Should the court agree to this petition and issue a winding-up order, liquidation proceedings will commence ultimately leading to your business ceasing to trade.

What should you do having received a winding-up petition?

You really should contact a licensed Insolvency Practitioner who will discuss the difficult financial situation that your company is in and decide if there are any other better options open to you that could stop the winding-up petition and avoid the company being liquidated.

What options are there to stop the winding-up petition?

1. The company could try to raise the funds to meet the demands of the creditor.
2. The company could contact the creditor once again to endeavor to come to some repayment arrangement that is acceptable to all parties although, if they have reached this stage in the process, it is unlikely they would agree.
3. The company could try to persuade the court to adjourn proceedings or have the petition dismissed. To do so, you would need to demonstrate that more time is required to repay the creditor or you could bring into question the accuracy or validity of the liability.
4. An adjournment could also be sought to give the company more time to arrange a different formal insolvency process such as a Creditors’ Voluntary Liquidation that is a more flexible arrangement.

As you can see, a winding-up petition is extremely serious and should you receive one, you need to act quickly. Therefore, do not delay in getting in contact with us.