Our team at FWJ are experts in negotiating settlement of a petition debt – whether acting for the creditor or the debtor.
Ultimately in winding up situations – the creditor doesn’t want to wind up the company as it will cost it further money and it wont get its debt back. Equally the debtor wont want to get wound up as the company will cease to exist. Therefore, it is often in the interest of both sides to try and reach a negotiated settlement if at all possible.
Options include
- Instalment payment over a period of time. This is quite common, especially f the debtor is tight on money. However, there are risks – if the petition remains in place, it might get supported by another creditor and go under. Careful thought needs to be given as to how long the petition remains in place at court.
- Offering a reduced lump sum payment. Again, this might suit both sides – money is paid to the creditor and the petition is dismissed – removing the risk of it being supported by another creditor.
- Paying the debt in full but bearing your own legal costs. Sometimes this makes sense for the creditor – it is better to get the debt paid and bear your own legal costs rather than risk the petition being supported and having to hand back any money the debtor has paid since the petition was issued.
- Agreeing an adjournment of the petition whilst the debtor arranges funding from elsewhere
Whatever your situation – we are likely to have seen it before. Our team can help negotiate settlements even in the trickiest of situations.
Get the petition dismissed as soon as you can
If the winding up petition debt is paid in full, there are still very important steps to take to avoid ongoing risks. As the petition you want it dismissed in order to protect any money you have been paid. As the debtor, removing the petition from the court record can stop the bank freezing the account or the petition being supported by another creditor. Let us help.
If the debtor company is able to pay the winding up petition debt in full, then it is sensible for it to do so as soon as possible. Once the petition debt has been paid in full, the winding up order can be withdrawn from court by consent and dismissed.
What to do about legal costs – more detail
Often, the petitioning creditor will ask for its costs of the winding up process to be paid in full and the debtor company normally agrees to payment of costs.
Otherwise, there is a danger that if the debtor company only pays the winding up petition debt, it can be wound up for the legal costs although this would be unusual.
The real danger of arguing for too long over legal costs if the debt has been paid is that another creditor may support the winding up petition, take it over and then wind up the company.
It is also always better for the debtor company to have the petition struck from the court record in order to safeguard its interests and avoid it becoming public.
Negotiating with HMRC
A winding up order for non payment of taxes can be frightening. But there are always things which can be done including
- negotiated settlements,
- company restructuring,
- disputing the claim,
- seeking business funding or
- applying for a validation order as just some of the choices.
We boast Andy Lynch as a member of our petition defence team. Andy spent 18 years at HMRC before joining the firm. There is nothing he doesn’t know about HMRC claims – including HMRC winding up petitions. His expertise can help avoid HMRC winding your company up.
How we can help creditors
If you are a creditor, the whole purpose of the winding up petition procedure is often to help recover the petition debt.
Therefore, it is often much more sensible to enter into a sensible repayment agreement if the debtor can’t pay the debt and costs in one go. The alternative is to advertise the winding up petition and wind the company up. But this will almost certainly mean that you get no money back. As soon as a petition is advertised, it is likely that other creditors will support the winding up petition, the company’s bank account will be frozen and the company fail.
- If a winding up order is made then it is highly unlikely that a debt will ever be paid.
- therefore a sensible negotiated instalment settlement of a winding up petition debt if often the right way to go;
- at Francis Wilks & Jones, we have great experience of doing this and if needed, getting the winding up petition adjourned (delayed to a later date) at the winding up order court hearing to enable pressure to be kept on a debtor to make the agreed payments.
We can also advise on the tricky questions of whether to withdraw the petition prior to the winding up petition hearing when only some of the debt and legal costs still remains outstanding. There are important considerations to take into account in such circumstances.
How we can help debtors
From a debtor’s perspective, we can help negotiate that realistic instalment plan to pay off the winding up order debt. We can assist in this part of the winding up petition process and often it requires provision of some financial evidence to the petitioning creditor to persuade them to enter into a repayment proposal.
Whatever your situation, the winding up petition team at Francis Wilks & Jones can assist.
