Winding-up petitions are often used to prompt payment for an outstanding debt. Being served with a petition is a very serious matter indeed, as it could lead to compulsory liquidation, and this is irreversible.
If your company has been issued with a winding-up petition, you must act quickly. Here we take a look at some of the most commonly asked questions by companies facing a winding-up order, including advice on how to avoid such a situation by taking early action.
Does my creditor have grounds to present a winding-up petition?
If your company owes £750 or more and have ignored a series of notices demanding payment, including an official statutory demand, then your creditor will have grounds to issue you with a winding-up petition.
If you are in dispute over the debt, do not ignore it. Similarly, if your company is facing financial difficulties, do not try to brush them aside. Instead take urgent legal advice with a view to protecting your position and to avoid a winding-up petition being issued wherever possible.
How do I stop a winding up petition?
If your company is facing only temporary issues with making payments, then it may be possible to put a halt to the winding-up petition. Lawyers for defending a winding up petition will take you through the steps involved in achieving this.
It is important to be aware however that there are only seven days from the date the petition is served to file a response with the court. Once this period has passed, the petition will be advertised in the London Gazette, giving banks the opportunity to freeze accounts, and potentially suppliers to hold back on goods or services. Such action can lead to devastating effects for a business, so be sure to waste no time in taking specialist advice.
Can a winding up petition be withdrawn?
In most cases, creditors will prefer not to pursue winding-up proceedings. Most of the time they simply want to get paid, and they would prefer you to stay solvent and for the business relationship to continue. It will therefore sometimes be possible to have a winding-up petition withdrawn.
How do I defend a winding up petition?
It is possible, in some circumstances, to defend a winding up petition. There are certain considerations to be made however: Firstly, is there a genuine dispute over the debt? If so, the petitioner should not be taking the winding-up petition route. They should instead be using the Part 7 claim procedure via the traditional court, rather than a winding-up procedure in the insolvency court. If there is a genuine dispute then the court will strike out the winding-up petition and order costs in your favour. Be sure to take expert legal advice if you believe you are in dispute, as it is important to ascertain that the dispute is genuine before you take this route.
Secondly, do you have a counterclaim against the petitioner? If so, this could result in the petition being struck out. If you are being pursued for an amount that is less than what you believe should be due to you, perhaps because a breach of contract on the part of the petitioner led to you suffering losses that exceed the amount they are claiming, then it is likely the winding-up petition will be struck out.
Lastly, if the winding-up petition documents are defective, or the correct procedure has not been followed in issuing it, then again it may be struck out. This is quite common in cases where legal advice regarding a winding up petition is not taken by the petitioner.
My company has been serviced with a winding up petition – what happens next?
You’ll need to take immediate legal advice if you have been served with a winding-up petition. Choose your lawyers for defending a winding up petition wisely, because they will need to be equipped with the necessary skill and in-depth knowledge of this specific area of law in order to be in a position to devise a strategy to protect your best interests.
If you are seeking legal advice regarding a winding up petition, look to London based Seth Lovis & Co. for the expert advice and guidance you need. Our dedicated insolvency team has a respected track record in successfully protecting businesses from winding-up proceedings. Call us now and we’ll treat your case with the highest priority. You can reach us on 0207 282 4289 or by email at email@example.com.