What’s the Timeframe for Issuing a Winding Up Petition in Scotland?
In Scotland, as in the rest of the UK, a business is within its rights to issue a winding up petition against a debtor company for unpaid debts. Many of the Insolvency Rules that apply north of the border are the same as those in England, Wales and Northern Ireland, although there are also a few key differences in the process it’s essential debtor companies are aware of.
The Scottish Process
In Scotland, a petitioning creditor will normally instruct a solicitor to draft the winding up petition and file it with the Sheriff Court or the Court of Session just as you would in England. The appropriate court is dependent on the value of the paid-up share capital. If the court accepts the petition, they will then fix a date and venue for the court hearing. This is where the winding up process differs slightly.
The Key Differences
- In England – At this point, the petitioning creditor will have to serve the petition on the debtor company and then wait at least seven days before the petition can be advertised in the London Gazette. This is a crucial stage in the process because once the petition has been advertised, the company’s bank accounts are likely to be frozen by the banks. This makes it extremely difficult to make payments, continue to trade, pay for professional advice or find a way to pay the debt.
- In Scotland – Unfortunately, the seven-day window after the petition has been served and before it has been advertised that exists in England is removed. The Scottish court will have some discretion about how it deals with the petition, but normally the petition will be advertised as soon as it is presented to the court. At this point, a First Order will be granted and an advertisement will be placed in the Edinburgh Gazette IMMEDIATELY. The petition will also be ‘walled’, which means it’ll be placed on the court’s notice board for the banks to see. In most cases, the debtor company’s bank accounts will be frozen.
Trying to save the Business
In Scotland, once the petition has been advertised, it will then have eight days to lodge its defence and prevent a winding up order being made. However, with company bank accounts now likely to be frozen, it will be almost impossible to access the funds required to save the company. It may be that plenty of options remain, such as applying for a validation order to allow transactions to pass through the company bank account or exploring alternative finance streams, but without a means to pay advisors it can be extremely difficult.
The lack of any grace period between the petition being presented to the court and placed on public record also means Scottish winding up petitions are more likely to be used maliciously to damage competitors.
If you have been threatened with a winding up petition in Scotland then it’s essential you act now before the petition is presented. For no-obligation advice and assistance, please call 08000 746 757 or email: firstname.lastname@example.org today.