There are a number of things that can happen when a winding up petition is issued. It depends whether you are the creditor (the person or company who has issued the winding up petition) or the debtor (the company who has received the winding up petition).
If you are the creditor / petitioner
If you are the creditor who has issued the winding up order, the following should be taken in to account
- you will receive the sealed winding up petition back from the court ready for service. The winding up petition will show the court date when the matter is back in the winding up petition court, commonly 8-10 weeks after the date of issue (although Covid is slowing matters down);
- you will then need to arrange for service of the winding up order on the registered office of the company. This is normally done by a process server experienced in service of winding up orders;
- Once the winding up order has been served, the debtor will either get in touch to arrange for payment, ask for further time to pay or dispute the debt either partially or entirely. When faced with these choices, the creditor will do a number of different things
- If the debt is paid then the creditor normally wants to withdraw the winding up petition to safeguard the money it has been paid;
- If the debt is disputed the creditor needs to work out whether the dispute is a genuine one or whether it only covers part of the outstanding monies or not. The matter can then rapidly become quite complex if the debtor is threatening an injunction to prevent the advertisement of the winding up petition.
- If no response is received from the debtor, the creditor can arrange for the winding up order to be advertised in the London Gazette. The winding up order then becomes public knowledge. In the continuing absence of payment of the debt, the creditor will file certain documents at court in advance of the court hearing. So long as this is done properly, at the hearing, the court will make the appropriate winding up order and the company is placed into liquidation.
If you are the debtor
If you are a debtor who has received a winding up petition, then you should consider the following
- the petition is served at your registered office. Sometimes the registered office is different to the trading address of a company and can be an accountant’s office. It is very important that if your registered office is different to your trading address, then any post which is sent to your registered office is forwarded or notified to you upon receipt. Sometimes we are instructed by companies who have been unaware of the winding up petition and the first they know about it is when it is advertised in the London Gazette;
- as a debtor you then have a series of choices
- You pay the full debt (or negotiate payment terms);
- You pay part of the debt and set out reasons why the balance isn’t being paid;
- You dispute the entire debt and if the petition isn’t withdrawn, seek an urgent court injunction to stop it being advertised in the London Gazette;
- If you are insolvent or do not believe that you can pay your debts as demanded, then you can simply let the winding up order go through or alternatively we would recommend you take some restructuring or insolvency advice to see if there are other options available to help save the company.
What happens if the winding up order is made by the court?
It is important to understand what happens after a winding up order is granted. This isn’t the end of the matter for the individuals involved as directors or managers of the debtor company. The liquidator will make investigations into the running of the company and this can end up resulting in personal claims against the directors and/or managers.
Whatever your questions relating to winding up petitions, we have the expert team here to help you. Don’t delay, get in touch and we can help.