Our team of liquidation experts at Francis Wilks & Jones act for clients on a wide variety of compulsory liquidation issues on a daily basis. From companies facing a winding up petition, to creditors who want to wind up a company because they are owed money. Our many years of experience acting for all types of businesses and all types of clients in this area can give you the confidence to get in touch with us, whatever your situation.
Compulsory liquidation & winding up – don’t delay, act quickly
If you are a director of a company and have received a winding up petition from a creditor, you need to act fast. Whether you agree or disagree with a creditor’s claim against you, failure to deal with the situation can be disastrous for your company.
It is vital that you take expert advice as a matter of urgency in order to deal with any winding up petition presented against you.
If you take early advice, the team at Francis Wilks & Jones can often prevent irreparable damage being done to your company, which can happen very fast once a winding up petition is issued.
The consequences for a company ignoring a winding up petition can be:-
- The winding up petition is advertised only 7 days after you receive the petition. Advertisement will have a significant detrimental publicity effect on your company, and can affect relationships with customers, suppliers and your bank.
- Banks and financiers check the London Gazette pages daily, and once notified that a petition has been bought against their customer, they will freeze your bank account until the matter has been dealt with in court. This will make continued trading extremely difficult or impossible.
- If you don’t deal with the matter within 7 days before the petition is advertised, then even if you come to an agreement with the original creditor, another creditor who is owed at least £750 can ‘take over’ the petition and continue to wind up the company.
How we can help immediately
The sooner you seek professional help after you have received a winding up petition the better. If you contact us early we can help you:-
- settle the matter with your creditor before the hearing is advertised and other creditors take it over
- alternatively, if a settlement is not possible because the debt is reasonably disputed, then we can act on your behalf to prevent the petition being advertised and to dispute the debt
- if your bank account is frozen, we can apply to the court on your behalf to continue to use the bank account, to allow you to continue to trade.
Once a winding up petition is granted this brings an immediate end to the life of the company. Directors and shareholders lose control over the company, and a liquidator is appointed to collect in and distribute assets.
Any director or person considered to be a director in a liquidation will be subject to scrutiny. A liquidator is required by law to file a report for the purposes of the Company Directors Disqualification Act. In addition, any liquidator who believes that a director has been guilty of misconduct may be subject to a claim for personal liability.
The good news is that if you take decisive action as soon as you receive a petition, then a lot of the above can be avoided.
The team at Francis Wilks & Jones can assist you in this difficult time. Contact one of our advisers today to discuss how.
Whatever your situation – we can help
We have also set out below our answers to the common questions we get asked on this subject. But do feel free to call one of our friendly team of advisers for a confidential call on any of these issues and we will happily talk to you about your options.
Common questions answered
1. What is compulsory liquidation?
Compulsory liquidation is a form of liquidation process by way of company liquidation which is obtained through applying to the court for a court order liquidating a company. At Francis Wilks & Jones we act for anyone wishing to apply to the court for a company liquidation by way of a compulsory liquidation order.
2. What does a liquidator of a company do?
In all forms of liquidation, including compulsory liquidation or winding up, a liquidator is appointed over the company. However, what does this mean, and what does the liquidator actually do in a compulsory liquidation?
3. What is the compulsory liquidation process?
As a director or owner of a company, the compulsory liquidation or compulsory winding up process can be quite daunting. We set out below some more information on what this entails and what it might mean for your company.
4. I have received a statutory demand - what can I do?
If you have been served with a statutory demand by a creditor owed money by your company, then this is probably the first step towards that creditor serving you with a winding up petition. It is vital that you deal with the statutory demand as soon as possible. We explain below the reasons why.
5. I have received a winding up petition - what can I do?
If you have received a winding up petition against your company, it is vital that you don’t ignore it. A winding up petition, no matter how spurious you think it may be, can have devastating consequences for your company very quickly after it is served on you, even before a hearing takes place. We set out below some options for you if you find yourself in this situation.
6. What happens to a company after a winding up petition is made against it?
At Francis Wilks & Jones our team of company liquidation expert lawyers are often asked, what is the effect of a winding up order on a company. We set out below what the winding up process means for a company that finds itself compulsorily wound up.
7. What must the directors and shareholders do in a compulsory liquidation?
If a winding up order has been made over your company, it can be a worrying and anxious time for both directors and shareholders. They want to know whether they still have a role within the company, and what their duties are to avoid falling foul of insolvency legislation. We set out below where directors and shareholders stand once a company has been wound up.
8. What are creditors rights in a compulsory liquidation?
A compulsory liquidation is often bought by a creditor who has run out of patience and wants to force a company to pay amounts owed. However, what happens to that creditor once the winding up petition is granted, and what is the general role of a creditor in a compulsory liquidation? We take a look below.
9. Can I start a new company with the same name?
We are often asked at Francis Wilks & Jones to act for a director who has been involved in a company liquidation and wants to start up a new company as a company director with the same name as the old company. Whilst there are certain prohibitions on doing this under the law, it is possible in the right conditions. We set out below some more detail.
10. Am I liable for company debts as a director?
In any insolvency situation or business rescue situation a director will naturally be concerned as to their own potential personal liability for company debts. We set out below some more information on the position of directors in an insolvency situation.
- 1. What is compulsory liquidation?
- 2. What does a liquidator of a company do?
- 3. What is the compulsory liquidation process?
- 4. I have received a statutory demand - what can I do?
- 5. I have received a winding up petition - what can I do?
- 6. What happens to a company after a winding up petition is made against it?
- 7. What must the directors and shareholders do in a compulsory liquidation?
- 8. What are creditors rights in a compulsory liquidation?
- 9. Can I start a new company with the same name?
- 10. Am I liable for company debts as a director?