How to get an Injunction for a Winding Up Petition
While it isn’t easy obtaining a formal injunction against a creditor whom you know is on the brink of serving you a Winding up Petition, it is possible. You will need what is legally referred to as ‘prima facie evidence’, which you can present to the High Court. This article will explain to you how that process might unfold but we should point out, this isn’t something you’ll want to attempt alone.
Our recommendation would be to call us for advice, or consult your qualified legal advisor on the matter since these matters can be complicated. If you’re reading this article it’s likely you already recognise the severity of a WUP, should it be issued. Once the petition is advertised, your bank accounts will be automatically frozen which will severely jeopardise the ability of your company to continue trading.
Responding to a Statutory Demand
A statutory demand is often the first step in the insolvency process and can be used as proof of the company’s indebtedness before serving a winding up petition. In this situation, the indebted company must decide quickly whether to dispute the debt or pay it. If the company decides to dispute the debt, it should respond formally in writing, explaining why it doesn’t agree with the statutory demand. Keep copies of any such correspondence and ensure the letter clearly sets out the grounds of your dispute, and clearly request that creditor does not consisder serving a Winding up Petition without letting you know.
If the debt is valid, it’s essential that the company acts swiftly to pay as it can be a costly mistake to wait until a winding up petition is presented to the Court to pay the outstanding debt.
An Injunction – Classic Grounds
A winding up petition can be restrained if the company applies for an injunction or in other words has a hearing on whether or not the petition is valid and a winding up order should be granted. The application for an injunction can be made to the Court and is normally granted if there is sufficient evidence of a genuine dispute between the parties. Other grounds for an injunction are as follows:
- If the petition is an abuse of process or otherwise bound to fail
- If the company has a genuine and serious cross-claim or right of set-off for an amount equal to or exceeding the petition debt or that would reduce the debt to less than £750
- If the petition is bound to fail as a matter of fact or as a matter of law
- If the petition is unfair to the company
- If the petition has been presented by the creditor other than for the purpose of getting the company wound up
- If the creditor has another remedy, which is more suitable but they don’t intend to pursue.
If the company is unsuccessful in getting an injunction on these grounds, the winding up petition is likely to proceed and result in Court order to close the business. If the company obtains the injunction, the creditor who issued the petition becomes liable for the legal costs attached to obtaining the injunction.
The application for an injunction should be accompanied by a witness statement from a company director or other employee, setting out the grounds on which the debt is disputed and showing evidence, such as letters, emails and other documents produced at the time between the creditor and the indebted company. The supporting witness statement must also contain a summary of the financial affairs of the company and include the latest balance sheet, profit and loss accounts and forecast.
Once the application for an injunction has been made, the company and the creditor will get notice of the date and time of the hearing.
If you have been threatened with or served a winding up petition, please call 08000 746 757 or email email@example.com for free and confidential advice from one of our professional advisers.