Usually, the next stage to your Winding-Up Petition is for it to be advertised in the London Gazette. This can alert your bank who will freeze your company bank account stopping payments being made. The effect of this on your business will be devastating. It is crucial you contact us immediately the petition has been received as there are more options available to your business and once we are familiar with your situation we can look to put solutions in place to protect your business.
Not only do we sometimes have the ability to adjourn the petition there are also a number of rescue procedures available to your company which may help to avoid the winding-up of your company and in some instances preserve the business.
Speak to Fortis today to for free professional advice for your business. All initial conversations and meetings confidential and free of charge.
As mentioned above, a winding-up petition is a very serious matter and requires immediate action from the directors of the company. The main options available to you are as follows:
1. Speak to the Creditor
You'll see if you can arrange an informal repayment of the debt if the petition is dismissed, which may be very unlikely in the circumstances. Usually to get to this position the creditor will have incurred additional costs in bringing about the action so may be reluctant to agree any kind of informal payment.
2. Propose a Company Voluntary Arrangement (CVA)
A CVA is a formal legally binding agreement to repay the company debts over a period of time. Please refer to our section on CVA’s where these are explained in more detail.
3. Notice of Intention
There are options in certain circumstances to apply to file a Notice of Intention (NOI) with the court to allow a stay of proceedings while the company looks to explore the viability of the Administration procedure. Whilst this NOI is in place, the court halts any action being taken against the company and if the Administration is successfully entered into then all legal actions against the company will cease.
4. Sell your assets
Unfortunately; if you have to face liquidation there may be possibilities of the current directors or other third parties purchasing some or all of the assets of the business.
5. Dismissals and Adjournements
We are able to instruct specialist solicitors to assist with the dismissal or adjournment of the petition in instances where it is genuinely disputed if it can be argued legitimately that the company needs more time to pay or that the outstanding debt amount is not accurate. In these circumstances, it may be possible to stop or postpone the petition from being advertised.
6. Payment in full
Finally and the most obvious solution is to make full payment of the debt. It may be possible to raise finance against company assets in order to release funds to discharge the debt.
The costs incurred by the petitioning creditor will usually range up to around £750 in addition to the courts deposit of roughly £1,200. These expenses have to be covered prior to anything else. Further to these initial costs there will solicitors costs to cover as they will need to instruct a barrister to attend the hearing on your behalf.
Fortis have assisted numerous companies in these instances with successful outcomes which has allowed business to avoid the consequences of failure. The total outlay for the above will be in the region of £2,000 but a small price to pay if it means the preservation of your business.
If you can raise the funds to repay the debt, please be aware that the amount owed will be more after the petition has been served due to the expenses mentioned above that the creditor will have incurred. Therefore, if the company you owe the money to has not yet issued a petition and is only threatening to do so you need to take action immediately! Provided you act before the petition is issued you won't have to cover the creditor's issuing expenses.
In instances where the winding-up petition has already been advertised in the London Gazette and your company bank accounts are frozen then this makes things a lot more difficult. It is possible you could seek an adjournment of the petition still. You may also still be able to unfreeze your bank accounts by obtaining a validation order.
If the court grants the winding up order an Official Receiver or liquidator will be appointed. It is their duty to realise the assets of the company for the benefit of the creditors. This is known as compulsory liquidation.
The final matter to be aware of once the winding up order is granted is that the appointed liquidator will have a duty to investigate the conduct of the Directors. This will focus on making sure there was no fraudulent or wrongful trading especially during the period the company was deemed to be insolvent.
Directors that are found to be guilty of misconduct can be made personally liable for the amassed debts of the company during the period of insolvency. Any further implications like fraudulent trading can be punishable by way of a fine, imprisonment and Director disqualification which restricts you from acting as a Director of a Limited company for a period of up to 15 years.
Should you wish to discuss any aspects of Winding-Up Petitions or the liquidation process then please do not hesitate to contact us. All initial conversations and meetings are confidential and free of charge.