Companies served with a winding up petition (WUP) by a creditor usually have a history of late payments, returned payments, missed payments and a failure to address cash flow issues.
However, a winding up petition needs to be addressed immediately because if a creditor applies to the court for a WUP, insolvency proceedings have begun.
A limited company owing £750 or more which does not take steps to pay its debts is at risk of being taken to court as a result of a winding up petition – a relatively small amount considering the far-reaching implications of a WUP.
The WUP is actually a form lodged with the court by a creditor who has to prove that the debtor company is unable to pay its debts.
If a winding up petition is successful, the following can happen
Companies subject to a WUP may also have to pay the court fees of a creditor if the petition is successful.
Proving that a company is unable to pay its debts can be crucial to the success of a petition – a creditor might have issued a statutory demand, obtained a court judgment or sent in bailiffs who were unable to recover sufficient assets to settle the debt.
WUPs served on companies with a share capital of more than £120,000 are heard at the High Court, otherwise the winding up petition will be heard at the court nearest the company’s registered office.
Companies at risk of liquidation should seek legal advice immediately from Duncan Lewis insolvency solicitors, who can act swiftly to protect a company from being wound up.
Statutory demands have to be responded to within 21 days and court judgments within 14 days.
Failure to pay under a statutory demand within 21 days can lead to a WUP, so time is of the essence.
If a court judgment has been obtained and a company is unable to pay the debt or does not think the sum demanded is correct – the options include:
Duncan Lewis debt management solicitors can advise at any stage of a corporate debt solution matter.
For expert legal advice on debt solutions and Winding Up Petitions, call Duncan Lewis Insolvency Solicitors on 0333 772 0409.