If you want to start proceedings against a company that owes you money, the most serious action you can take is to issue a winding up petition. If the debt remains unpaid and the petition is filed correctly and for the right reasons, it is possible that the court will force the company into compulsory liquidation.
Any creditor may present its own winding up petition, even if another creditor’s petition is already pending. If one is pending, you can give notice that you will appear at the hearing to support or oppose it. If the petitioner withdraws, settles or fails to proceed, you can ask the court to substitute you as petitioner. The court can do this, on such terms as it thinks just, if it considers that you would have the right to present a petition yourself and you wish to pursue it. In practice it is usually quicker and cheaper to support the existing petition than to start a second one.
Joining the petition
If you choose to join a winding up petition as a supporting creditor, you should gather all the evidence you have. This includes invoices, collection letters, letters of demand, phone call logs and any other documentation you have that proves the existence of the debt.
The next step is to deliver a notice of intention to appear to the petitioner or its solicitor. If you do not know the details of the petitioner creditor, it is possible to find their details in the public records of court filings or the advertisement of the petition in The Gazette. The notice must include, among other things, your name and address, the petitioner’s name and postal address, the date the petition was presented with a statement that the notice relates to that petition, the hearing date, the amount and nature of your debt, and a statement that you support the petition. It must be signed and dated by you or on your behalf. It must reach the petitioner by 4pm on the business day before the hearing. The petitioner then adds you to the list of creditors appearing, which is handed to the court. If your notice is late or does not comply, you can appear only with the court’s permission.
Once your notice has reached the petitioner in time, you are entitled to appear at the winding up hearing and make representations to the court. It is important to note that joining a winding up petition is no guarantee that the debt will be recovered. Payment in a liquidation follows a statutory order. A lender with a fixed charge is paid from the assets that charge covers. The costs of the liquidation and the preferential creditors come next. Where the floating charge was created on or after 15 September 2003, the prescribed part of floating charge assets is then set aside for unsecured creditors, unless it is too small to justify the cost or the requirement has been disapplied. The floating charge holder is paid from the rest. Unsecured creditors share what is left, together with the prescribed part.
Need Advice?
Issuing a winding up petition is a serious step to take and you should receive professional advice before doing so. Simply call 0208 444 3400 for a free, no-obligation discussion.