If you are owed unpaid debts and have been chasing the debtor company to no avail for a significant period of time you may wish to consider issuing a winding up petition. A winding up petition should be a last resort you use when trying to recover a debt – if it is successful it will result in the forced liquidation of the debtor company.
As you will only receive proceeds from the winding up in line with the statutory order of priority of creditors, there’s no guarantee that you will receive all (or even most) of the unpaid debt through liquidating the company.
That said, issuing a winding up petition can be a powerful tool when all other methods of debt recovery have failed. The company must owe you more than £750 for you to be able to issue a winding up petition against them.
Read our full Guide to the Winding up Petition Process
Issuing the Winding Up Petition
In order to wind the company up using the winding up petition process you will need to fill in the relevant forms, file a copy with the court (along with the court’s fees) and serve a copy of the petition with an officer or employee of the debtor company.
You should note that as part of the winding up petition form, you will need to prove the debt owed, which is normally done by attaching a copy of a Statutory Demand or a court judgment against the debtor company for the amount owed. You should generally have issued a company with a Statutory Demand prior to filing a petition against them.
Once the petition has been filed, you will receive a written confirmation from the court as to whether they have accepted the petition and a date for the winding up hearing where they have.
You need to advertise the petition prior to the court hearing: this will normally involve publishing the petition in The Gazette (at least 7 working days prior to the hearing), filing proof of the advertisement with the courts (at least 5 working days before the hearing) and a list of those attending the hearing (by 4.30pm on the day prior to the hearing).
The Court Hearing
The court will decide whether to issue a winding up order and appoint an Official Receiver to liquidate the company at the winding up petition hearing. You should ensure that you are adequately prepared for the hearing and that a suitable person from or representing your company can attend the hearing.
If the courts grant the winding up order, they will appoint an Official Receiver to liquidate the company. The Official Receiver may also appoint a liquidator to help liquidate the company where appropriate.
As part of the liquidation process, you will be asked to submit proof of outstanding debts the company owes you (along with all other creditors of the company). The liquidator will sell the assets of the company and distribute the proceeds between its creditors in the set order of priority. The amount you receive will depend on the sale proceeds and where you fall in the order of priority – it’s rare for any unsecured creditor to receive the full amount of their debt.
When the assets are distributed, the Official Receiver or liquidator will formally close the debtor company and the company will have been successfully wound up.
Want Winding Up Petition Advice?
Issuing a winding up petition is a serious step to take and you should receive professional advice about the costs and implications before you issue the petition. Here at AABRS we are happy to help. Simply call Simon Renshaw on 0208 444 2000 for an initial free of charge discussion.