Whether you need debt recovery help or are on the receiving end of proceedings - we have the expert team to help. Advising companies and individuals since 2002, we can find the answers you need.
If a creditor has a debt against a company, the normal route is to apply to court for judgment (often referred to a County Court Judgments or CCJs). Alternatively, if a debt due to the creditor is outstanding and is not disputed, then the creditor can present a statutory demand or a winding up petition against the company.
A statutory demand is a formal demand served under the insolvency laws for repayment of any debt over £750.
- if a statutory demand is ignored and not paid within 21 days, the company can be wound-up by the court as it is presumed that the company cannot pay its debts.
- following the winding-up of the company, directors may even become personally liable as a result of the company being placed into liquidation.
Winding up order
A winding-up order may be sought by a creditor following the presentation of a statutory demand or once a creditor has a CCJ. The method of obtaining a winding-up order is that the creditor must present at court and serve on the company a winding-up petition. This is now issued on-line.
The service of a winding up petition on a company can have enormous consequences for a business. If not dealt with properly it can
- lead to the company being wound up, shut down and the end of your livelihood.
- it is vital to take early control.
- if the winding up petition becomes public knowledge, this can quickly lead to the bank freezing accounts and suppliers refusing to supply.
- this often spells the end of the company as it is unable to trade.
Directors and managers of the business are often unaware that they can held personally liable for company debts if the company keeps trading after service of the winding up petition and is then later wound up. This is another reason to take early legal advice.
At Francis Wilks and Jones we can provide the urgent advice you need to assist with the survival of the company and advise the directors how to avoid any personal liability as well.
AREAS WHERE WE CAN HELP YOU
Defending a winding-up petition
Winding-up petitions can be successfully disputed and the petition dismissed. There are many reasons for this.
- the winding-up petition may be procedurally incorrect; or
- the debt legitimately disputed.
In any of these circumstances proper advice can lead to the winding-up petition being struck out
In very urgent cases we can apply to the court for what is called an injunction – a type of court order preventing the petition becoming common knowledge to the wider world whilst the underlying dispute is dealt with.
We have huge experience in this area having dealt with over a thousand winding up petition cases. Legal advice is vital in this area. It can make the difference between the life or death of your business, often built up over many years.
Validation orders – helping you to continue trading
A validation order is a legal mechanism that provides for companies to legitimately deal and dispose of its assets (money or otherwise) following receipt of a winding-up petition.
- continued trading in the absence of a validation order can lead to personal claims against the directors if the company is later wound up.
- Validation orders allow the breathing space needed to take stock – allowing the company to trade and repay the winding-up petition debt.
Negotiated settlements of a winding-up petition debt
At Francis Wilks & Jones we have a specialist team well versed in negotiating settlements of winding-up petitions.
- always remember that the creditor issuing the petition has probably done so in the hope that they will be repaid the debt. The alternative in the event of non payment is that the company will simply be wound up – with little prospect of any payment being made at all to the person owed the money.
- it is often possible to structure payment settlements of the debt over a period of time and have the petition dismissed from court record.
- dismissal of the petition from court is very important. Until this time other creditors of the company can “support” the petition and the position can quickly snowball out of control and lead to the winding up of the company.
- once the petition is dismissed from court then it is no longer possible for other creditors of the company to support it.
Helping you chase your own debts
One of the reasons a company is served with a winding-up petition by a disgruntled creditor is because the company itself has not been collecting its own debts properly. Commonly it is simply a case of poor cashflow.
We often find that “blitzing” a company’s sales ledger can bring in the funds required to settle the petition debt and enable the company to continue trading normally.
At Francis Wilks & Jones we have a fully dedicated debt recovery team backed with a state of the art case management system. We can upload your entire ledger and send out letters before action for free. It could make the difference between the success or failure of your business.
Specialist restructuring / insolvency advice
Winding-up petitions are normally brought by a single disgruntled creditor in circumstances where the company might have many other creditors as well. However there are often better alternatives for the company, creditors and employees than the company simply being wound up.
These can include refinancing, restructuring or putting the company in to administration.
At Francis Wilks and Jones we have links to many trusted third party professionals whom we have developed relationships with over many years. We can take the risk out of choosing the right professional for your type of business. Contact us to find out more, or visit out links pages.
Directors duties following service of a winding up petition
Following presentation of a winding-up petition, a director’s decisions (past and present) may be subject to great scrutiny if the company is later wound up by the court. It is vital that you take advice to avoid not only the company becoming insolvent, but also the risk that the liquidator of the company may also come after you personally for repayment of company money / assets paid out after to service of the winding up petition.
Other pages on our website set out directors duties in general and risk to a director’s personal assets. Please visit our shareholders and directors advice page for assistance with director’s duties. You may also find it useful to review our claims against directors page.
Setting aside a statutory demand
There is no statutory mechanism for setting aside a statutory demand served on the company.
- once 21 days has passed after service of the statutory demand, a creditor may present a winding-up petition and then seek a winding-up order against the company.
- this can be left open for months or even years meaning the company remains constantly at risk of being wound-up.
If the debt is due, then ideally the company should engage with the creditor and seek to agree terms of payment. However, if this is not possible, then the only alternative is to apply for an injunction against the creditor seeking to restrain of the presentation of a winding-up petition.
At Francis Wilks & Jones we can assist with advising on and preparing the necessary documentation to seek such an injunction, or alternatively we can assist with creditor negotiations.
At Francis Wilks and Jones we have considerable experience in advising on and assisting with the above matters and we would be more than happy to discuss any of the above on an initial free no obligation basis. Please feel free to contact us if you have any such queries.
FWJ were very hands-on, getting involved from an early stage in seeking to avert an expensive set of litigation proceedings. I am more than happy to recommend their services, particularly when it comes to considering complicated issues or complex proceedings.A Company Director