Call 0207 504 1300 to present a Winding up Petition upon a debtor company
You should consider insolvency proceedings if a debtor company owes you an undisputed amount of no less £10,000, and has not:
- Paid the debt
- Provided a satisfactory proposal for payment
Under these circumstances, you can present a creditor's Winding up Petition for a court order that forces an insolvent company into compulsory liquidation.
Formal and Statutory Demands
Serving a statutory demand before commencing Winding-up Proceedings isn’t always necessary, but it does strengthen your case. Your statutory or formal demand should clearly state:
- The amount owed
- The circumstances of the undisputed debt
- That Winding-up Proceedings may commence unless payment is made within 21 days
You must take action swiftly because your debtor may be:
- About to collapse
- Trading while insolvent
- Causing you and your business to incur losses
- Paying other companies and people instead of you
- Using your credit terms as an unsecured, interest-free loan
- Transferring assets into a new business while leaving you and other creditors to perish in the old one
Consequences of a Winding-up Petition
The presentation of a Winding up Petition should concern a company director because Section 127 of the Insolvency Act 1986 is immediately triggered. Under Section 127, directors are forbidden from taking several actions, including making payments from the company's bank account(s) without first obtaining the court's permission.
For example, a director would not be able to access the company's bank account to pay preferred suppliers. Failure to respond to the Winding up Petition, or obtain a validation order may result in:
- The freezing of the debtor company's bank account(s)
- The petition being advertised in the London Gazette newspaper.
Furthermore, if the company is wound up; the director will become personally liable for all transactions and payments made from the bank account(s) after the issuing of the Winding up Petition.
Talk to Your Debtor
The period before, during and after the commencement of a formal insolvency procedure can be very stressful. You (the creditor / petitioner) should talk to the debtor as they may be open to negotiating a deal to avoid their company being wound up. Strictly speaking, all payments and any use of the debtor company's assets should be validated by the court after a Winding up Petition has been presented.
You should never abuse a Winding up Petition as an instrument of debt recovery. However, it's perfectly okay to present them upon insolvent companies who are unable to pay debts when due.
I&L can help creditors recover payments from overdue invoices. When used in insolvency proceedings, a Winding up Petition is a very serious instrument. Call 020 7504 1300 now for free and confidential advice…