Creditor's winding up petitions
A company owes me money- can I issue a winding up petition?
If a company is unable to pay its debts, a creditor can seek to have the company put into compulsory liquidation (wound up). The debt due to the creditor must be £750 or more and undisputed.
Do I need to serve a statutory demand before presenting a winding up petition?
Following the expiration of the temporary measures introduced under the Corporate Insolvency and Governance Act 2020, in response to the COVID-19 pandemic, there is no longer a requirement to serve the company with a statutory demand prior to presenting a winding up petition. However, it may be sensible to serve a statutory demand as if the company does not pay following service of the statutory demand, they are deemed unable to pay their debts as they fall due (a ground upon which the Petition can be based). Service of a statutory demand may in itself prompt payment.
What is the process for presenting a petition?
A Creditor must first ensure that there are no current petitions issued against the company, or some other form of insolvency action as if a petition is presented whilst another is pending, the Creditor is at risk of an adverse costs order.
Once this check has been completed, the company (normally through its solicitors) can prepare the petition for filing with the court. The petition must contain certain mandatory information and be verified by a statement of truth. The petition, statement of truth and certificate of service of the statutory demand (if applicable) is then filed with the court.
How do I serve a petition?
The court will provide a sealed electronic copy of the petition, with the hearing date endorsed, which should then be served on the company at their registered office. Efforts must be made to personally serve the petition on a director, officer or employee of the company, but if that does not prove possible, service can be effected by leaving the same at the company’s registered office in a manner that ensures it is likely that it will come to the attention of the company.
What happens after the petition has been served?
Not less than seven working days after the petition was served on the company and not less than seven working days before the hearing, the petition must be advertised in the London Gazette. This provides formal notice of the petition to any other creditors that may wish to support or oppose it. Advertisement of the petition will also normally lead to the company’s bank accounts being frozen.
What happens at the hearing?
At the hearing, the Court will hear from the petitioning creditor, the company and any other creditors and either make an order such as a compulsory order (winding up), dismissal of the petition or an adjournment of the hearing.
What happens once a compulsory order is made?
The company will now officially be placed into compulsory liquidation and the Official Receiver (or a third party liquidator if appointed by the creditors) will investigate the affairs of the company, interview its directors and seek to realise any company assets. If funds are available, once the fees of any liquidator and secured creditors are taken into account, the remainder is shared equally between the company’s unsecured creditors.
Will I recover my costs?
If you obtain a compulsory order, then this provides for the costs of the petitioning creditor to be paid out of the assets of the company. Whether these are recovered are not will depend on the level of assets.
How Brett Wilson LLP can assist you
There are a number of procedural steps that need to be taken in order to put a company into compulsory liquidation that are subject to strict time limits. Failure to comply with these steps could lead to an adjournment of the hearing or the dismissal of the petition.
Our specialist solicitors can guide and assist you through each step of the process and our services include:
- Preparing and arranging service of a statutory demand
- Negotiating with debtors
- Preparing, filing and arranging service of the petition
- Advertising the petition
- Preparing for, and arranging representation for the petition hearing
- Assisting with any post-petition correspondence with the Official Receiver or liquidator
To arrange a preliminary consultation with our civil litigation and insolvency solicitors or to find out how we can support you, send us an email, complete our online enquiry form or call us on 020 3504 3182. If emailing or using the online form, please provide a short outline of your situation.
Where possible, we recommend that you contact us before taking any formal insolvency steps yourself.
Costs information will provided following your enquiry.