Compulsory liquidation and winding up

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Don’t delay or ignore liquidation and/or winding up. 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 in the London Gazette 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 our team can help you

• settle the petition claim 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 for a validation order 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 as part of a liquidator claim.

The good news is that if you take decisive action as soon as you receive a petition, then a lot of the above risk can be avoided.

Please also feel free to browse our director service case studies to gain more of an understanding of some real-world examples of help we’ve provided.

The team at Francis Wilks & Jones can assist you in this difficult time. Contact one of our friendly advisers today to discuss how.

Having worked with Tim and Andy, the founding partners of Francis Wilks & Jones, since 2003 and before at their previous practice, I thoroughly value the expertise and flexibility brought to every assignment by them and their team. As a relatively new insolvency practice, BM Advisory has carefully selected its business partners who share a similar enthusiasm to find workable solutions for our mutual clients often in distressed situtations. Francis Wilks & Jones fits this bill well and we would have no hesitation in recommending the firm to anyone who requires a sound law firm who are approachable and easy to talk to.

Andy Pear, partner at BM Advisory