If you own a Scottish registered company and a creditor has threatened to serve a winding up petition against you, the procedure you will go through is slightly different to the process south of the border. In Scotland, you actually have less chance to react to the petition, and ultimately less time to save your company.
How does it differ?
- In England – Once a winding up petition has been served against your company the petition cannot be advertised for seven days. This gives companies an opportunity to settle the debt as soon as the petition has been served. Once the petition has been advertised in the London Gazette, the company’s banks, which keep a regularly eye on the Gazette, will almost certainly freeze the company’s bank account immediately.
- In Scotland – The winding up petition in Scotland dates from the presentation of the petition at the court offices. At this point, a First Order is given and the petition can be advertised in the Edinburgh Gazette immediately. At the same time, the petition will be ‘walled’, which means it’ll be pinned to the court’s notice board. The banks will keep a close eye on the court notice boards and will freeze company bank accounts on first sight of the petition.
The company then has eight days to lodge its defence against the winding up petition. However, as the petition is advertised and walled as soon as it is served, bank accounts are often frozen before a company can pay for professional assistance or pay advisors to propose a company voluntary arrangement (CVA). That means very often this can spell the end of a Scottish company. One unfortunate side effect of the reduced time period in Scotland means petitions can be lodged maliciously to intentionally damage a company.
If the petition is successful and a winding up order is made at the court hearing, the company will be wound up and put into liquidation. The court will appoint an interim liquidator who will decide if and how funds should be distributed to the creditors.
This subtle difference in the petitioning timeline means that in Scotland, you must act to save your company as soon as a winding up petition is threatened, as you will not have that seven day grace period once it has been served.
If you have been threatened with a winding up petition you have limited time. If you have received a winding up petition then you need to act quickly. Call Simon Renshaw now on 0208 444 2000 to discuss your circumstances or email: firstname.lastname@example.org.
Written by: Simon Renshaw