As Insolvency practitioners, we regularly act for Directors and Companies who are threatened with the presentation of, or who have been served with, a Winding-Up Petition – a court order forcing an insolvent company into compulsory liquidation.
The consequences of a winding up petition:
- Any disposal of the company’s property or payments to creditors after the date of the presentation of the petition at court may be recoverable by a liquidator.
- Customer contracts may be cancelled once the winding up petition has been advertised.
- A winding up order may be made if the petition debt is not paid.
This blog post features our top five tips on how Company Directors should react when a Petition arrives at their registered office. Dealt with properly and with appropriate professional advice, a winding up petition does not necessarily mean it’s the end for the Company.
1. Act Promptly
When the petition comes to your attention – DO NOT IGNORE IT. You have a range of available options, but only for a limited time.
2. Take Professional Advice
Seeking advice from experienced Insolvency Practitioners such as our team at Chamberlain & Co is the most important step. They can discuss available options to help assist your company and point you in the right direction. Here at Chamberlain & Co, we provide straightforward honest advice as part of a free initial consultation on a no obligation basis.
Once you have considered all of the options with your Insolvency Practitioners decide on and implement the strategy that is chosen for the Company as early as possible.
It is a procedural requirement that the Petition is advertised in the London Gazette. Once a Petition is advertised (which happens at least 7 business days before the petition is heard by the court), the Company’s bank account is likely to be frozen by the Company’s bankers, so you have to act fast!
4. Is it the End?
Do not assume the Petition inevitably means the end of the Company’s trading existence. It doesn’t! It may be possible to undertake successful negotiations with the petitioner regarding the possibility of a better return to the creditor over time than might be achieved after costs should the company be wound up. It is also possible to apply to the court for an order releasing funds held in the company’s bank account to pay the petition debt.
If a formal insolvency procedure is an option (this can be considered as part of a strategy to rescue the Company or its business), It is beneficial to take advice on choosing the right procedure for each Company, on its particular facts whether it be:
5. Which Insolvency Practitioner do I choose?
If a CVL, CVA or an Administration is appropriate as the way forward, choose your Licensed Insolvency Practitioner carefully as different Insolvency Practitioners have different areas of expertise. Your choice can make or break the Company and its Directors. At Chamberlain & Co, we build strong relationships with our clients and arrange meetings free of charge to further discuss your options in detail. We realise that each assignment presents a unique set of problems which require innovative solutions.
Give us a ring? 0113-2420808 or email firstname.lastname@example.org
We look forward to hearing from you.