If you have been issued with a winding up petition by a creditor then it’s impossible to overstate just how serious this situation is. Fail to act and a winding up order could be made to liquidate your business in a matter of weeks. This will result in the company’s assets being sold for the benefit of your creditors, and the business will be closed.
However, there are still a number of opportunities available to save your business, but you must act IMMEDIATELY. As well as having the power to make a winding up order, the court can also decide to adjourn the hearing if it believes the company will pay the debt if it is given more time. Alternatively, it could be that the very existence of the debt, or the amount owed, is in dispute, and the court may choose to adjourn the winding up petition until the debt has been proven.
In what circumstances may an adjournment be sought?
If the court is going to adjourn a winding up petition it will need a good reason to do so. Generally, if the court believes the company could be in a position to repay the debt and continue trading, it will try to give it the time it needs. However, you will need the assistance of a solicitor or an insolvency expert and documentary evidence to fight your corner.
- If funding can be arranged – It is possible for the debtor company to ask that the petition is adjourned to enable funding to be arranged to repay the creditor, or to establish the correct position of the debt. In this case, the court may allow a short adjournment for these matters to be resolved.
- To propose a company voluntary arrangement (CVA) – If the company cannot pay off the whole debt before the petition hearing, but you are determined to repay the debt and continue trading, you may be able to adjourn the hearing by proposing a CVA. In this case, presenting a draft CVA to the court can be enough to prompt an adjournment.
- To appoint an administrator – Another way to have a winding up petition hearing adjourned is to serve a notice of intention to appoint an administrator. Once this notice has been sent to the court, a moratorium is created which prevents legal action, such as a winding up petition (WUP), from being continued against the company. It will also prevent any new action being taken. This process can be expensive and tends to be used as a method of last resort, but it can help to save the company from closure.
Want to Talk?
If a winding up petition has been served on your company, the company is a very serious position and time is of the essence. We are happy to help you with this process, or to advise in situations where a validation order may be an appropriate option – simply call Simon Renshaw on 0208 444 3400 or email firstname.lastname@example.org.