What’s the Procedure for Winding up a Company?
A Winding up Petition is one of the most serious threats a limited company can face, giving any business a seven day window to appeal before a judge hears the evidence. If the evidence is found to be credible, the judge will make the petition into a Winding up Order, which will mean the forcible liquidation of a company.
In this article we explains the process and procedure by which a winding up petition unfolds.
(1) A Creditor Issues the Winding up Petition
Generally, the Winding up Petition comes as a result of a creditor having chased a debt repeatedly, and issued either a Statutory Demand or a CCJ. If those have not been successful, the creditor seeks help from a solicitor to escalate the claim into a Winding up Petition
(2) The Company has Just 7 Days to Object or Appeal
The seriousness of receiving a Winding up Petition cannot be overemphasised. Once the 7 days are up, the judge will hear the evidence and rule upon the Winding up Order which means the end of the company and its striking off the register at Companies House. It is therefore vitally important that directors take immediate action, by contacting professionals such as ourselves, to figure out a coherent strategy. It may be possible to appeal, stop or adjourn the petition but time is of the essence.
(3) The Petition Advertisement is Published
As part of the Winding up Process, the petition is published in the Gazette, which is the official journal of public record. Not only will this affect your company reputation, since this information is widely available, but this advertisement triggers the bank to freeze company accounts.
(4) Company Bank Accounts are Frozen
Even if the petition has been in error, and you are mounting a credible defence, this is going to prevent the continuation of your business. The banks do this to protect themselves, and it is possibly to apply for a Validation Order to get this unblocked, but is nevertheless a very tricky situation for any business.
(5) The Winding up Petition Hearing
On the day of the winding up petition hearing, the petitioner and the debtor will either attend themselves, or send representation in their stead. The court will assess the circumstances of the case and, if the evidence is found to be credible, rule up the Winding up Order, which means immediate compulsory liquidation.
At that point an Official Receiver will take control of the company, while the director’s powers will cease.
Need Help or Advice?
If your company is being petitioned, you will need to speak to us with the swiftest urgency, as the closer it comes to the 7 day time limit, the less chance there is to find an alternative to compulsory liquidation. If you want free, confidential advice contact us via the live chat, phone or emai