- March 1, 2023
- Posted by: Gill Hadley
- Category: Uncategorized
If you’re a creditor of a business (i.e. the company owes you money) and you’ve tried everything in order to force the company pay the debt you, it’s possible to wind it up on the ground that it isn’t able to pay its obligations. Given the seriousness of the consequences the procedure should be considered only as a last resort however, in certain circumstances it is essential to prevent the business from accruing more debts.
To liquidate a company, you have to oblige it to liquidate and this is done by submitting a winding up application to the court. The court will then consider the petition and, if it is in agreement that the business should be shut down the court will issue an order to wind up which will cause the business to be liquidated. The company’s assets will be sold off and the proceeds of the sale will be given to the company’s creditors.
A winding-up petition is usually filed by HMRC however, anyone who is owed more than PS750 could make use of a winding-up petition to shut a business down.However considering the expense of presenting a petition that are close to the PS2500 mark, what’s that is owed will usually be much greater.
Ensure that compliance with all legal requirements
The process of presenting a petition for winding up is possible without assistance, but to be sure that all legal requirements are fulfilled, it is recommended to seek assistance from an expert insolvency professional. If the winding-up petition is not properly presented the costs could be assessed against the person who is submitting the petition (the “petitioner”) Therefore, it is crucial that to fill out the forms correctly and only used when there is evidence that proves the debt.
The procedure for the presentation of a winding-up petition
- It is the first thing to submit an application for winding up ( Form 4.2) together with an Affidavit (statement of fact) which confirms the circumstances which are the basis of the petition. Make three copies on the winding-up petition and then send them to the appropriate court. If, according to the Companies House register it is found that there is a ‘paid-up share capital greater than PS120,000, then the petition should be submitted to the High Court. If the paid-up share capital is not more than PS120,000, then the forms must be submitted to the closest the court ( court finder) to the registered office. This can be located in the Companies House register.
- Additionally, you must pay the winding up fees, which consist of a court cost and the deposit for petitions (to handle the winding-up). The fees could be returned in the event that the company is able to pay them. This money should be paid to the “HM Courts and Tribunals Services‘.
- After the petition has been filed with the courts, the court will set the date and location at which your petition is considered. It is then your responsibility to serve (deliver) the document of the petition that has been sealed by the court, at the registered office of your company. If this isn’t possible then the petition should be handed over to the company’s principal place of business or to a director of the company or secretary of the company. A copy should also be delivered to an insolvency practitioner in the event that the company is going through an insolvency process.
- The petitioner then needs to make an affidavit in court to prove that the petition was served. Then you will be issued the Certificate of Service by the judge.
- At no earlier than seven calendar days following the date on which petition is given to the company, however, at least seven days prior to the date of the hearing The petition’s notice is required to be published through the London Gazette.
- A minimum of five days prior to an hearing date, petitioners has to submit an Certificate of Compliance at the court together with the copy of notice that was published within the Gazette.
- If the business plans to challenge an application, the company should make an affidavit to oppose the petition at least five business days prior to when the next hearing date is set.
- The petitioner has to provide the court with the names of all participants in the courtroom. This includes people who are in favor of and against the petition.
- In the hearing for petitions at the petition hearing, directors, creditors, and shareholders have an opportunity to speak. The court can also ask to hear from any person with any interest or connection to the property of the company.
- After all evidence is heard and weighed, the court will determine if:
- Rejig the petition
- Do not dismiss the hearing
- You can make a winding up request
- Create an interim or temporary
- Create any other order that it deems appropriate
If you’ve been served with an order to wind up or are threatened with one, you must consult with a professional promptly. we have a lot of experience dealing with companies insolvent and will be able to provide you with advice on the options you could do. Call us