What is a Winding up Order?
A winding up order is the most serious action that can be taken by a creditor (a party you owe money to) against your business. The first step is for a creditor to issue a statutory demand against your business for an unpaid debt in excess of £750. If the debt remains unpaid after 21 days then the creditor can ramp up the pressure by issuing a winding up petition.
At this point, you have just a few days to settle the debt or take other action to remedy the situation. Fail to do so and the winding up petition will be heard by the court and a winding up order can be made to force the business into compulsory liquidation. A liquidator will then be appointed to sell the business’s assets and close it down.
What can you do if a Winding up Order is Made Against Your Business?
Once the court has made a winding up order, there’s very little you can do to prevent the liquidation of your business. If you want to save your business then you have to act earlier.
The court must review and approve the petition before it is issued to the insolvent company. After receiving the winding up petition, you then have seven days before a winding up order can be made. That gives you a window of opportunity to take one of the follow actions:
- Pay all the debts owed to the creditor who has issued the winding up petition against your business.
- Dispute the debt if you have substantial proof that the debt claim is inaccurate or unfair. You must have strong grounds to do so as this is a serious allegation against the creditor called ‘abuse of court process’.
- Propose a company voluntary arrangement (CVA) for the repayment of the debt over a longer period of time. If accepted by your creditors, that will allow you to avoid the liquidation process and continue trading.
- Get an administration order to put the company into administration. That would stay all ongoing legal action against the business, including the winding up petition. An administrator would then be appointed to evaluate some of the company’s assets and repay its debts.
Can you Appeal a Winding up Order or get it Dismissed?
Your options are very limited after a winding up order has been made. However, there are still a few avenues you could explore:
- Have the winding up order rescinded – You can apply to the court to have the winding up order rescinded within seven days of the order being made. To be successful, you will have to show that the court did not have all the facts or the circumstances of the company are now materially different than when the order was made.
- Apply to have the liquidation proceedings stayed – An application to temporarily or permanently ‘stay’ the liquidation proceedings can be made by a creditor, a shareholder of the company, an appointed liquidator or the official receiver.
- Appeal the winding up order – It is possible to appeal the winding up order. However, this remedy is limited and can only take place on the basis that the decision was wrong or unjust due to serious procedural or other irregularities.
How Long does Winding up a Company Take?
The first step is to issue a statutory demand, which the business has 21 days to pay. Once that period has passed and the debt remains unpaid, the creditor can ask their legal team to apply for a compulsory winding up order. From that point, it generally takes around 28 days to wind up the company.
The winding up petition is sent to and reviewed by the court. If it’s passed, it’s then sent to the insolvent company. The company then has seven days to act. If it fails to act or runs out of time and the court approves the winding up order, the liquidation process will begin. The winding up petition will be advertised in the London Gazette and the company’s bank accounts will usually be frozen.
Need Professional Winding up Order Advice?
If you’ve received a statutory demand you cannot pay, have been issued with a winding up petition or a winding up order has been made against your company, you need to act fast. We can discuss your options with you and help you carefully consider the implications of each. For a free, no-obligation consultation, please get in touch with our team.