Winding Up Petitions

In brief, the sequence of events is as follows:

Issue

The winding up petition is issued by the court.

Service

The winding up petition is served on the debtor by a process server.

Advertisement

The winding up petition is advertised in the London Gazette.

The petitioner can delay the advertising if meaningful discussions are on-going with the debtor to pay the debt.

Once advertised in the London Gazette, the winding up petition is in the public domain for other potential creditors to see.

The advertisement contains information such as the name and registered address of the company, the details of the petitioner, the date of the court hearing and details of any appointed Solicitor or Insolvency Practitioner.

Negotiation & Discussion

There is usually a significant gap between the advertising in the London Gazette and the court hearing.

During this period the debtor may look to pay the debt after the petition has been advertised. If the debt is paid the original petitioner may seek to withdraw the petition.

As the petition has been advertised, this may alert other creditors who may wish to join or take over the petition.

Court Hearing

The winding up petition is either approved, dismissed, withdrawn or adjourned.

If the winding up petition is approved, the Order is served on the company.

The Official Receiver or another Liquidator (Insolvency Practitioner) will be appointed to realise the business and its assets.

An investigation into the company and its directors will be conducted by the Insolvency Service and the Liquidator to ascertain if the inability to pay the debt was due to any wrongful trading, wrongdoing or fraudulent trading by the directors.

The consequences of such an investigation can lead to criminal proceedings for fraudulent trading, director disqualification proceedings and/or personal financial liability for the directors for any debt wrongly incurred.

Once the winding up petition has been advertised in the London Gazette, the consequences for the debtor company are potentially very severe including:

• Company bank accounts being frozen leading to inability to trade
• Impact on the credit worthiness of the company thereby affecting ability to trade
• Reputational damage and
• Other creditors joining the winding up petition

We have extensive experience in representing clients oppose winding up petitions, including those presented by HMRC for failure to pay VAT, PAYE and Corporation Tax.

There are a number of ways in which we can assist if you have been served with a winding up petition including:

• Assisting you with the issue of frozen bank accounts
• Dealing with the petitioner and solicitors on your behalf
• Handling negotiations with the petitioner and any other creditors that may have joined the winding up petition following its advertisement
• Present a factual defence by ascertaining if the debt is genuinely disputed and preparing a robust response to the petitioner inviting the withdrawal of the winding up petition
• Present a technical defence by ascertaining if the petitioner has taken all the prescribed steps in both the drafting, service and advertising of the petition and complied with all the prescribed time limits

If a technical breach is identified, an application for the dismissal of the winding up petition is appropriate.

The issuing of a winding up petition should be a last resort.

We have considerable experience in preparing and issuing winding up petitions. It is a highly technical area and requires the requisite skill and knowledge to ensure our client’s position is protected.

The issuing and service of a winding up petition on the debtor, even before it has been advertised in the London Gazette, can have a sobering effect on the debtor. It often results in payment being made quickly in order to avoid the adverse publicity associated with the advertisement.

However, in circumstances that the company is unable to discharge the debt and raises no genuine dispute concerning the debt, the company will be liquidated. At this stage it becomes uncertain as to whether the original petitioner will recover the full debt owing to it as the debtor company may well have many other unsecured creditors as well as a number of preferential creditors.

For this reason, we look to provide our clients with early and effective advice on the quickest and most cost-effective solution to achieve their stated goal.

Our dispute resolution lawyers are experienced in analysing any situation and providing clear and concise advice to resolve the issue.

The expert lawyers at Kangs are available to assist you. We can arrange initial consultations in person, by video call or telephone.

Please contact one of our experts listed below or contact us at:

E: info@kangssolicitors.co.uk

T: 0333 370 4333