Exploring the Winding-Up Petition: What It Means for Your Business

1. Get Quote About FAQs Blog Contact Make Payment Recent Post Which Kind of Debts Should You Settle First When Winding Up a Company? 02/07/2024 The Importance of Legal Advice in Winding Up a Company 19/06/2024 10 Factors to Consider When Selecting an Insolvency Practitioner in 2024 11/06/2024 How Simple Liquidation Can Be a Lifesaver for Struggling Businesses Exploring the Winding-Up Petition: What It Means for Your Business 27/05/2024 Navigating Individual 0 Comments / Liquidation / By Viv1 Insolvency: Insights from October to December 2023 There is no denying that if your company receives a winding-up petition, this isn’t something that can just be 24/05/2024 ignored. A winding-up petition is a serious statement of intent which has been sent by a creditor and threatens to shut down your company because you have debts which are yet to be paid. If a winding-up petition goes through then the company will be closed via the liquidation route. This is serious as it is the strongest action that a creditor can take against your business. As such, company directors must be up to speed with what the petition is and what they should do if they are faced with one. All of this will be discussed in further detail throughout the below article. The Winding Up Petition: A Complete Guide If you and your company are served with a winding-up petition then you should be aware that this is one of the most serious pieces of legal action that a creditor can take against you. If you don’t do anything about it then the petition states that there are a series of events that will stop your company from being able to trade and will eventually result in the winding up of your company. As such, it is important that you, as the business owner, act fast when you receive one of these petitions. You only have seven days from the date of service until the company’s financial situation becomes public knowledge which can damage your reputation and stop you from getting back customers should you be successful in rescuing your company. Once you have responded the court will set a hearing date and you will be able to argue whether or not you believe your company should be wound up, which can ultimately be decided by the court. It’s a good idea if you have been served with one of these petitions that you seek various pieces of advice and guidance from insolvency practitioners such as Simple Liquidation as this will ensure that you understand all of the different options you have. Why Has Your Business Received a Winding Up Petition? As stated above, receiving a winding-up petition is extremely serious. Granted, it doesn’t necessarily mean that your business is doomed but it does still require action to be taken in order to rescue it. If no action is taken then the overall situation, and the situation of your business is simply just going to get worse. If a company becomes insolvent, meaning that it is unable to pay off its various debts and liabilities once they fall due, when a winding up petition is issued by a creditor, this is basically a last resort to try and recover the money that they are owed. There are usually actions taken before a winding-up petition is filed, namely actions like trying to get the money repaid in an amicable way that doesn’t stop the company from trading, like standard methods of debt collection. There are a lot of creditors who will initially issue a statutory demand against a company before opting to serve a winding-up petition. That being said, it isn’t a mandatory recommendation that creditors do this. A debt of £750 or more must be owed to the creditors who are filing the petition in order for the petition to be successful. The Immediate Consequences After Receiving a Winding Up Petition If a creditor issues a winding-up petition then it needs to be advertised in the London Gazette. This isn’t good as it means that any other creditors as well as your bank are going to become aware of the fact that your business is in difficult financial times. Banks tend to freeze company accounts once a petition is made as this is the most effective way that they can protect their own interests. In What Circumstances Would a Creditor Issue a Winding Up Petition? If a creditor is owed £750 or more and the debt itself isn’t in dispute, they can issue a winding-up petition. They will also have likely tried to recover the debt by other means first, like through other debt recovery channels. They need to be able to prove that the debt itself exists and this is generally achieved through a 21- day statutory demand for payment, which is issued to the company prior to the filing of the winding-up petition. If the statutory demand isn’t paid then the debt outlined in said demand exists in law, so it can be used as evidence that the company is insolvent and cannot meet financial obligations. Who Usually Issues a Winding Up Petition? It’s usually HMRC, banks and trade suppliers who issue a winding-up petition. HMRC in particular is known to use this method of debt recovery. It is not something to be taken lightly though because the cost of issuing such a petition is significant and as such is only ever used as an absolute last resort. Costs come from the likes of court fees and needing to hire a legal team to represent the petitioner, all of which comes at a high

2. price. Not to mention, there is no chance the petitioner will be able to claim these expenses back as they are already struggling to recoup existing debts. What Should You Do If You Receive a Winding Up Petition? If you receive a winding-up petition then you should be sure to act fast. As previously stated, you only have 7 days until this becomes public knowledge, which can lead to unrest throughout the business as well as accounts being frozen. You should consider reaching out to specialists such as Simple Liquidation who will be able to speak to you and your business to find out the current position and work out the best way forward. If you have any questions or require any further information then do not hesitate to get in touch. ← Previous Post Next Post → Sponsored Casinos Are Desperate To Hide This Little Known Fact Read More Real Prize 0 Comments Login  1 Start the discussion… LOG IN WITH OR SIGN UP WITH DISQUS ? Name Share Best Newest Oldest  Be the ?rst to comment. Subscribe Privacy Do Not Sell My Data Sponsored Taste the Ooni Difference. Learn Why Ooni Stands Out Ooni Pizza Ovens Learn More Privacy Policy T&Cs Simple Liquidation 0800 246 5895 mail@simpleliquidation.co.uk Lawrence House, 5  St Andrews Hill, Norwich,    NR2 1AD