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  What is a Winding Up
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Winding Up Petition FAQ's

What is corporate insolvency - is a business insolvent if it cannot pay specific large debts, yet can pay smaller ones?

I have received notice of a winding up petition - can I now go into voluntary liquidation?

Can the court suggest administration, or will it just liquidate the company?

What is a 'petition advertisement'?

As a creditor of a company mention in a petition advertisement I do not want the firm liquidated because I am likely to receive nothing. Can I stop it during the 7 days?

I am a director of a company that is now in the process of liquidation - there are only five of us. Can I make a payment to the creditors or buy the company to prevent the liquidation? As a non-executive director I was unaware that it was this serious.

I am an employee of company about to go into compulsory liquidation. Will I get paid redundancy and wages due to me?

A company of which I am director is under liquidation. I am also a director of two other companies: can I retain these positions?

I have been informed by a creditor the he intends seeking a winding up petition. What should I do now?

What is corporate insolvency - is a business insolvent if it cannot pay specific large debts, yet can pay smaller ones?

There is more than one definition of corporate insolvency. A company is insolvent if:

  1. It cannot pay its debts as they fall due - that is irrespective of size of debt.
  2. It owes more money than the value of its assets. This includes prospective liabilities, such as from invoices for delivered goods yet to be issued by suppliers.
  3. It has failed to a pay a debt over £750 after being issued with a Statutory Demand.
  4. A court judgment against it for debt has not been paid.

So if a business can pay small debts but not large ones, it is regarded as being insolvent. It must be able to pay all debts.

For free advice contact us here

I have received notice of a winding up petition - can I now go into voluntary liquidation?
No - you cannot. You can defend the petition, but you cannot go into voluntary liquidation or administration, and neither can you sell any of the company assets.  The court would reverse the sale.

For free advice contact us here

Can the court suggest administration, or will it just liquidate the company?
If you defend the winding up petition, which is expensive, the court may order administration rather than liquidation if the judge feels that the company still has a future, and that it would be to the benefit of creditors to do so.

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What is a 'petition advertisement'?
The creditor making the petition must advertise it so that all interested parties are aware of it. There may be more creditors, for example, or banks that have an interest. The advertisement will appear in the London Gazette (or Edinburgh Gazette for companies registered in Scotland). This must be done 7 days before the court hearing of the petition.

The company can still come to a repayment arrangement during these 7 days, but its bank accounts will likely be frozen by the banks, and all share activity must cease. The company cannot be active during these 7 days.

For free advice contact us here

As a creditor of a company mention in a petition advertisement I do not want the firm liquidated because I am likely to receive nothing. Can I stop it during the 7 days?
You can make representation to the court, but must have a compelling reason.  Generally, the answer is no. Only the petitioning creditor can do so.

For free advice contact us here

I am a director of a company that is now in the process of liquidation - there are only five of us. Can I make a payment to the creditors or buy the company to prevent the liquidation? As a non-executive director I was unaware that it was this serious.
You can buy the company from the liquidator if he or she agrees.  Be careful if buying an insolvent company because there are certain laws regarding employees:  contact us before taking this step.

You can also make representation to the court.  Only the court can stop a liquidation it has ordered. If you are able to pay all debts plus legal fees owed by the company, then the court may decide that stopping the liquidation is in the best interest of creditors and employees. There are no fixed rules, but you cannot use any company assets for this and payment must be made in full. We may be able to help with more advice.

For free advice contact us here

I am an employee of company about to go into compulsory liquidation. Will I get paid redundancy and wages due to me?
If the company was insolvent you will be paid the statutory redundancy payment due to you plus any notice pay due, but payments may be capped. You will be paid wages due up to a set maximum (currently £800 + holiday pay) If you are owed more than that maximum you join the queue of unsecured creditors for the balance. Best see a solicitor about this.

For free advice contact us here

A company of which I am director is under liquidation. I am also a director of two other companies: can I retain these positions?
Meantime, yes. But if you are eventually subject to a disqualification order or declared an undischarged bankrupt as a result of the report of directors, you must resign both positions.

For free advice contact us here

I have been informed by a creditor the he intends seeking a winding up petition. What should I do now?
Contact us immediately.  We may be able to help you and your creditor come to a repayment agreement that suits you both. There are things you may be able to do depending on the circumstances of the case, but a voluntary arrangement is best.  

For free advice contact us here

 

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How to stop a Winding
Up Petition
When to use one
How is a Company
wound up?
What happens to the
directors?
What happens to the
Employees?
What is a Pre-Pack
Asministration?
Corporate Insolvency


 

 

 
 


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