The consequences of a winding up petition can be dramatic -both personally and for the company. Our specialist team can help you avoid the worst and make sure you limit and risk. Contact us today for your friendly advice.
The consequences of a winding up petition are varied but listed out below are some of the areas a debtor must take into account when served with a winding up order:
- disposition of company property being void. In layman’s terms, this covers a situation whereby selling of assets, spending of company money, charging assets etc after the date a petition has been presented can be invalidated by the court if the company is later wound up. This is pursuant to Sections 127(1) and 129(3) of the Insolvency Act 1986. Disposition of property after the date of a winding up petition can actually have serious effects on the directors of the company if a winding up order is granted by the winding up petition court. Indeed, a liquidator may seek to recover assets or property from directors by way of separate legal court action once a winding up order is made. There is a way around these difficulties and that is to seek what is known as a Validation order under Section 127 of the Insolvency Act. We can assist on this area.
- the bank may freeze the bank account. “Winding up petition bank account frozen” is something which commonly happens after the presentation of a winding up order. This is because the bank does not want to be held responsible for monies leaving the bank account after the date the winding up petition was issued. Normally this only happens after winding up order advertisement in the London Gazette but it can happen beforehand if it becomes public knowledge in other ways. It can have a dramatic effect on the ability of a company to then pay its debts.
- damage to commercial reputation. The existence of a winding up petition can have great ramifications for a company and its commercial reputation. If it becomes known to suppliers of the company, they may cease to supply the company or ask for cash on delivery. It may also affect the bank’s ability to raise finance and/or impact greatly on its existing finance facility. Other companies may also seek to recover their debts from the company quicker than they previously have.
- lost management time. Dealing with a winding up petition can involve considerable management time. Whilst there is obviously a cost involved with taking expert legal advice, it can help save valuable management time and allow the directors of a company to concentrate on running the business rather than dealing with an unfamiliar and potentially dangerous area of the law. If you get it wrong, a winding up order could follow and that means the company goes in to liquidation.
- claims against directors. If the company is would up – the former directors can face a range of serious personal claims by liquidators. These can result in having to pay money back to the company – or even director disqualification.
At Francis Wilks & Jones we are able to assist on all aspects of winding up petitions. Call our winding up petition experts now and we can assist your every need. With over 75 years of combined experience and thousands of winding up petitions under our belt, we are the country’s genuine experts when it comes to Winding Up order. Call now us now to speak to one of our friendly advisers.