When a creditor is owed money, they can issue a statutory demand, which is a formal request for payment of an overdue debt.
Once the statutory demand has been issued, the indebted company has 18 days to contest the debt or agree to its payment. If they are unable to reach an agreement, the debtor then has three days to pay the debt in full. Statutory demands are the formal precursor to issuing legal proceedings.
When a statutory demand has failed to secure payment, the next stage for the creditor is to send a draft winding-up petition to the indebted company. This is an effective way to get paid quickly as it comes with a stark warning of compulsory liquidation. Draft winding-up petitions are supported by a letter, stating that payment should be made within a specific timeframe; typically seven days. The letter also states that if payment is not made, the creditor will take further action and present the petition in Court. For the most part, the debtor will want to avoid the cost and stress of going to Court and settle the debt.
The Form Should Justify the Grounds of the Winding up Petition
A WUP is a detailed, and accurate information must be submitted to the Court before it can deal with the petition. To complete the form, the petitioning creditor or claimant must detail basic information, such as the petitioner or claimant’s name and address, name, address and registered company number of the company subject to the petition, incorporation date, nature of the business, etc. However, there are some answers that are less straightforward, such as the total number of issued shares in the debtor company, where applicable.
The petitioner also needs to set out the grounds on which the winding-up petition is sought and when the statutory demand was served and its total amount. A solicitor can assist with drafting a winding-up petition because of the level of detail and accuracy required to satisfy the Court. Any error in the wording of the petition can lead to the Court ‘rescinding’ or in other words cancelling the petition and making costs order against the petitioner.
Alongside the Winding Up Petition, the petitioner must include a witness statement that is signed and dated by an individual who is ‘concerned with matters related to the petition’. The person’s name, address and position of the company must be included or that of the solicitor to verify the truth of the petition.
The Filing Process
Once the petition is filed, and the Court is satisfied, it will seal it and send it back endorsed with the date and time it was filed in addition to the date and venue of the Court hearing. At this point, the petition must be served on the company itself either by the claimant or through a process service provider. Once the petition has been served on the company, a certificate of service must be completed by the claimant and filed with the Court. In line with insolvency rules, it is vital that this document is filed no less than five days before the Court hearing of the petition.
If you have not responded to a statutory demand and have been threatened with a Winding Up Petition, please call 08000 746 757 or email [email protected] for free and confidential advice from one of our professional advisers.