Is a creditor seeking a winding up order against your company? A winding up order is one of the most powerful legal weapons a creditor has, allowing them to initiate a winding up process against your company in order to liquidate its assets.
Winding up orders are typically issued after a winding up petition has been filed to the High Court. This is usually the final step in the debt recovery process, after your company’s creditor has exhausted other options such as payment demand letters.
A winding up order is only issued by a judge after a winding up petition has been presented to the court. Because of this, it’s vital that your company takes action as soon as possible to prevent a winding up order from being granted.
Winding up orders are legal orders granted by a High Court judge that allow one of your company’s creditors to force liquidation. If a creditor is granted a winding up order, they can initiate liquidation of your company to recover unpaid debts.
A winding up order is only issued after a winding up petition has been filed and the petition has been heard by the judge. Winding up orders are extremely serious and could result in the closure and liquidation of your company.
Because of this, it’s important to take action before a winding up order is granted by a judge. Your company can respond to its creditors and prevent a winding up order from being issued during the winding up petition process.
If your company’s creditors have not been paid after numerous attempts to recover debts they are owed, including statutory payment demands, they can file a winding up petition against your company.
This petition costs from £300 to £800 to file, in addition to filing fees and a deposit of £1,190 with the court. Because of this, a winding up petition will only be filed for if your company’s creditor is extremely serious about closing your company.
When a winding up petition is filed, your company will receive notice. It’s important that you seek legal advice and respond to the petition immediately to prevent your company’s creditor (or creditors) from being issued a winding up order.
Even before a winding up order is not immediately issued, a winding up petition can have serious consequences for your company. Petitions are published in the Gazette, often resulting in the freezing of your company’s bank accounts and other assets.
Receiving a winding up petition results in several restrictions being placed on your company. After receiving a petition, you are restricted from entering the company into a creditors voluntary liquidation (CVL).
You are also restricted from selling any of the company’s assets, or the company itself. In the event that the petition is successful, any company assets sold after it was received could be reversed by the court in order to repay your creditors.
Despite these restrictions, your company has several options for responding to a winding up petition and preventing a winding up order from being issued by the court:
Winding up orders are issued after a court hearing. In this hearing, your company has the chance to argue that the petition should be dismissed due to the debt not being proven or an agreement being established with the creditor.
In the event that the debt is not agreed upon, your company may be able to seek an adjournment. In some cases, such as when a winding up petition is filed for a debt that is obviously not proven, the judge may award costs to your company.
If your company reaches an agreement with its creditors close to the hearing date, it may still be required to participate in a hearing. Your company will need to present evidence that it has reached a serious agreement, such as a CVA, with its creditors.
Winding up orders are serious legal orders that can lead to the liquidation of your company if granted by a judge. Because of this, it’s extremely important to prevent them from being granted by responding swiftly to any winding up petitions.
Whether your company is dealing with a potentially hostile creditor and needs help or you simply want to learn how to respond to a potential winding up petition in the future, we can offer the advice and assistance you need.
Contact us today to learn more about the winding up petition process, the effects of a winding up order, and the options available to your company if it’s facing creditor pressure.