If you have received a winding up petition from a creditor, director or shareholder, you need to act quickly to prevent the liquidation of your company. A winding up petition is by far the most serious action that can be taken against your company. If you want to continue to trade and believe the business has a future, you must fight it every step of the way.
Why have you received a winding up petition?
Winding up petitions are most commonly presented by company creditors, but it is also possible that other stakeholders, such as fellow company directors, or even company shareholders, will want to try and shut the company down. But why would each group petition to liquidate the company?
- Creditors – A creditor of the company (someone you owe money) will issue a winding up petition if it has made multiple attempts to recover a debt and taken previous action, such as a statutory demand or a county court judgement (CCJ), without the debt being paid. The most common petitioning creditor in the UK is HMRC, which will seek to wind up the business to prevent further debts being accrued.
- Company directors – A company director can petition to wind up his or her own company if it cannot pay its debts or if the court can be given a reason why the company should not continue.
- Shareholders – The shareholders may seek to wind a company if 75 percent of the shareholders agree. This may occur in the case of a shareholder vs. director dispute, if, for example, the director wants to take the business in a different direction than the shareholders.
Defending against a winding up petition
If you want to defend your business against a winding up petition, it is essential you seek professional advice immediately. The first step of any petition is for a date to be set for the winding up petition to be heard. This is the chance for those supporting and opposing the petition to present their evidence to the court. Having heard the evidence, the court will then decide whether to:
- Dismiss the petition
- Adjourn the hearing
- Make an interim order
- Make an order to wind up the company
- Make any other order it sees fit
In the case of winding up petition presented by a company creditor, the petition may not even reach this stage if the debtor company can pay the debt owing or reach an agreement to settle the debt. The conclusion of the winding up petition will be largely determined by the case you present to the court, so it’s essential you have an experienced and knowledgeable team to fight your corner.
What are your options?
Receiving a winding up petition is extremely serious, but there are still a number of different routes you can take to potentially save your business. Read more about winding up petitions here. Or, for more information about defending your company against a winding up petition, please call Alan Bradstock 0208 444 3400 or complete our enquiry form.