winding-up order

Содержание
  1. What Is a Winding up Order & Can a Winding up Order Stopped?
  2. What Happens When a Winding up Order is Issued?
  3. The Winding up Petition Court Hearing
  4. What is Involved in a Winding up Order?
  5. What is the Winding up Process?
  6. How Serious is a Winding up Order?
  7. Can a Winding up Order be Stopped or Reversed?
  8. i. Recession Order
  9. ii. Stay of Proceedings
  10. iii. Administration will Rescind a Winding up Order
  11. iv. Company Voluntary Arrangement
  12. What Happens After a Winding up Order?
  13. Winding up Order
  14. What Does a Winding up Order Mean for a Limited Company?
  15. Criteria
  16. What can you do if a Winding up Order is Made Against Your Business for Non-Payment of Debt?
  17. How do I Stop a Winding up Order?
  18. (a) Have the winding up order rescinded or dismissed
  19. (b) Apply to have the liquidation proceedings stayed
  20. (c) Appeal the winding up order
  21. How Long does Winding up a Company Take?
  22. How Much Does a Winding up Order Cost?
  23. How do you Find Out if a Winding up Order has been Issued by a Court?
  24. What is a winding up order and can it be reversed once issued?
  25. Possible reasons why this stage has been reached
  26. Criteria for the application
  27. What is the procedure and timescale of a winding up order?
  28. Can a winding up order be reversed once issued?
  29. What Is a Winding up Order or Petition by Creditors and HMRC?
  30. Can a Winding Up Order Be Stopped?
  31. Options after a Winding Up Petition
  32. What to Do If You’ve Been Issued a Winding up Petition
  33. What Happens If a Winding Up Order Is Issued?
  34. What is a Winding Up Petition by HMRC or Other Creditor
  35. What if we do not agree with the debt, or not owe the debt claimed?
  36. When is the winding up petition advertised?
  37. Past case study — winding up petition
  38. What happens after the winding up petition is advertised?
  39. Freezing of Company Bank Accounts and Assets 
  40. A Court Hearing of the Petition For a Winding Up Order
  41. Directors potential personal liability for company debts 
  42. How do I protect myself from personal liability if the company is wound up?
  43. Stopping a winding up petition

What Is a Winding up Order & Can a Winding up Order Stopped?

winding-up order

A winding up order is a matter of last resort and a petitioning creditor will have exhausted all alternatives to secure payment. It will certainly be a costly process for the creditor, as the court fees and deposit are £280 and £1,350 respectively.

In addition the creditor will have spent several thousand pounds in legal costs and depending on the nature and complexity of the debt and whether you decide to appoint your own solicitors to defend it, will result in an expensive day out in court.

What Happens When a Winding up Order is Issued?

If your company has received a winding up petition from a creditor or HMRC, a court hearing date will be set to hear the petition.

At the hearing, the judge will consider whether the debt is actually due and establish whether the company can pay.

If the company is proved to be insolvent, then a winding up order will be made and the company will automatically be placed into Compulsory Liquidation.

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The Winding up Petition Court Hearing

If you decide to oppose the petition, you will need to file in court a witness statement which will demonstrate the grounds of your opposition. A copy of this witness statement will also need to be sent to your petitioning creditor.

Every person that intends to appear at the court hearing will need to give the petitioning creditor, notice of their intention to appear in court. In addition, the notice will need to include whether they intend to support or oppose the petition and the amount and nature of their debt.

If you are successful in dismissing the winding up petition, then the court will direct that the petitioner will need to give notice of the dismissal in the London Gazette.

What is Involved in a Winding up Order?

The judge will consider the evidence presented and if the company is deemed insolvent a winding up order will be made.

Once a winding up order has been made, the court will as soon as reasonably practicable, give notice of the fact that the company is in Liquidation to the Official Receiver.

The Official Receiver will receive the sealed copy of the winding up order and will then send it to Companies House for filing and then advertise the Liquidation in the London Gazette.

What is the Winding up Process?

(i) The Official Receiver will become the liquidator of the company and in due course will ask you to attend a meeting. You will receive a preliminary information questionnaire form (PIQC) which is a booklet containing around 50 pages of questions which you will need to answer by return.

(ii) The Official Receiver will now have the duty of investigating into the company affairs for any signs of misconduct or insolvent trading. As a director you can be personally liable for any actions deemed to be a breach of your fiduciary duty as a director.

(iii) Your powers as a director will now cease and you will have a duty to co-operate with the Official Receiver in relation to disclosing all financial information concerning the company.

Failure to cooperate into the inquiries made by the Official Receiver could result in the court to issue a warrant for your arrest and the seizure of any books or paperwork belonging to the company in your possession.

(iv) The liquidator will take control over the company’s assets.

(v) All employees will automatically be dismissed by virtue of the winding up order. They will need to contact the Redundancy Payments office in order to claim for any arrears of wages, holiday pay owed, redundancy pay and pay in lieu of notice owed.

If following the presentation of the winding up petition, a creditor distrained over the company’s assets, or perhaps there was a disposal company asset, or a payment from the bank, following the winding up order, these transactions will be considered void. The Official Receiver will therefore consider pursuing remedies to undo these transactions.

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How Serious is a Winding up Order?

Extremely serious. A winding up order can be a stressful time for any director and part of this anxiety is the uncertainty over an insolvency process which you cannot control. Un in a Creditors’ Voluntary Liquidation, where as a director, you can put forward your nomination of Liquidator, this will not happen in a Compulsory Liquidation.

The Official Receiver will be chosen by the Insolvency Service and investigate into your director’s conduct and you may face potential director disqualification proceedings.

Moreover since 1st October 2015, a new law has come into existence with the introduction of Compensation Orders which are designed to target directors once they have become disqualified. This can result in a director being made to contribute to the insolvent estate in the event that it is proven that the loss to creditors arose as a result of their misconduct as a company director.

Can a Winding up Order be Stopped or Reversed?

Although it is uncommon, it is possible for a winding up order to be reversed in a number of ways. However, this will undoubtedly be an expensive process as you will need to instruct both solicitors and other professionals to assist in this process.

i. Recession Order

Once your company has been wound up you will be sent a copy of the winding up order to the registered office address. One can apply to cancel (‘rescind’) the winding up order, if your company is able to pay the debts owed or alternatively if you could not attend the original hearing.

You will need to completed Form 7.1A and provide a witness statement which give details of the company’s assets and liabilities. Clearly, your argument may be that the court did not have all the relevant information when making the decision of the winding order and you will need to persuade a judge to reverse the decision.

You will need to apply to court within 5 business days of the order and will need to file the documentation in the same court that the winding up order was made and there is a court fee of £155.

Once you file the witness statement you will get a court hearing date (normally in 1-2 weeks’ time) and you will need to serve the copy of the application with both the Official Receiver and the petitioning creditor.

At the hearing you will need to explain to the judge why you consider that the order should be rescinded and either the Winding up will be allowed to continue or alternatively a rescindment order will be made.

ii. Stay of Proceedings

Another possible route to reverse a winding up petition would be for an application for a ‘stay of proceedings’. This is an order by the court to stop the insolvency from proceeding any further. This application can be made at any time and the court may order that the winding up be stay either permanently or for a specific period of time.

In these cases, the Official Receiver, a Liquidator, a creditor or shareholder of the company may make this application for a stay of proceedings.

iii. Administration will Rescind a Winding up Order

A Liquidator is able to make an application for an Administration Order which will have the effect of rescinding the winding up order and will allow an Administrator to be appointed over the company provided that one of the purposes of going into Administration can be achieved.

iv. Company Voluntary Arrangement

A Liquidator can propose a Company Voluntary Arrangement and if the requisite majority of 75% of more vote in favour of the Proposal then the court will make an order to stay all proceedings in connection with the winding up.

It is therefore imperative that you act fast and as soon as you receive a statutory demand or a winding up petition that you take immediate action and contact us at AABRS for professional advice. The chances of rescuing your business are increased if you take matters in to your own hands at the earliest stage.

What Happens After a Winding up Order?

Once the order has been granted, the court will appoint an Official Receiver to act as company liquidator. The OR will deal with creditors, investigate the actions of the directors in the period running up to the insolvency, or they may recommend the appointment of an insolvency practitioner.

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Источник: https://www.aabrs.com/services/winding-up-orders/

Winding up Order

winding-up order

A winding up order is the most serious action that can be taken by a creditor (a party you owe money to) against your business.

Read on to discover what this means, and what are the implications for you as a company director.

What Does a Winding up Order Mean for a Limited Company?

A winding up order is a court order which will instantly force your company into liquidation. It is the result of a judge ruling against the debtor upon a winding up petition by a creditor, such as HMRC.

In this situation, your options have run out, and the court will appoint an Official Receiver (OR) to liquidate all of your company’s assets.

It means the end of a limited company, the sale of any assets, and its eventual dissolution at Companies House.

Criteria

The first step is for a creditor to issue a statutory demand against your business for an unpaid debt in excess of £750. If the debt remains unpaid after 21 days then the creditor can ramp up the pressure by issuing a winding up petition.

At this point, you have just a few days to settle the debt or take other action to remedy the situation. Fail to do so and the winding up petition will be heard by the court and a winding up order can be made to force the business into compulsory liquidation. A liquidator will then be appointed to sell the business’s assets and close it down.

What can you do if a Winding up Order is Made Against Your Business for Non-Payment of Debt?

Once the court has made a winding up order, there’s very little you can do to prevent the liquidation of your business. If you want to save your business then you have to act earlier.

The court must review and approve the petition before it is issued to the insolvent company. After receiving the winding up petition, you then have seven days before a winding up order can be made. That gives you a window of opportunity to take one of the follow actions:

  1. Pay all the debts owed to the creditor who has issued the winding up petition against your business.
  2. Dispute the debt if you have substantial proof that the debt claim is inaccurate or unfair. You must have strong grounds to do so as this is a serious allegation against the creditor called ‘abuse of court process’.
  3. Propose a company voluntary arrangement (CVA) for the repayment of the debt over a longer period of time. If accepted by your creditors, that will allow you to avoid the liquidation process and continue trading.
  4. Get an administration order to put the company into administration. That would stay all ongoing legal action against the business, including the winding up petition. An administrator would then be appointed to evaluate some of the company’s assets and repay its debts.       

How do I Stop a Winding up Order?

Your options are very limited after a winding up order has been made. However, there are still a few avenues you could explore:

(a) Have the winding up order rescinded or dismissed

You can apply to the court to have the winding up order rescinded within seven days of the order being made. To be successful, you will have to show that the court did not have all the facts or the circumstances of the company are now materially different than when the order was made.

(b) Apply to have the liquidation proceedings stayed

An application to temporarily or permanently ‘stay’ the liquidation proceedings can be made by a creditor, a shareholder of the company, an appointed liquidator or the official receiver.

(c) Appeal the winding up order

It is possible to appeal the winding up order. However, this remedy is limited and can only take place on the basis that the decision was wrong or unjust due to serious procedural or other irregularities.  

How Long does Winding up a Company Take?

From the moment of receiving a statutory demand, the business has 21 days to pay.

Once that period has passed and the debt remains unpaid, the creditor can ask their legal team to apply for a compulsory winding up order. From that point, it generally takes around 28 days to wind up the company.

The winding up petition is sent to and reviewed by the court. If it’s passed, it’s then sent to the insolvent company. The company then has seven days to act. If it fails to act or runs time and the court approves the winding up order, the liquidation process will begin. The winding up petition will be advertised in the London Gazette and the company’s bank accounts will usually be frozen.

How Much Does a Winding up Order Cost?

Issuing a petition against a business that owes you money will cost between £400 and £800, plus the court deposit of £1600, and a filing fee of £280.

How do you Find Out if a Winding up Order has been Issued by a Court?

All insolvency events have to be advertised in the Gazette which is the official journal of public record.

To search for winding up orders you need to click here, then click the arrow by ‘liquidation by court’ to select the box ‘winding up orders.’

Источник: https://www.companydebt.com/what-is-a-winding-up-order/

What is a winding up order and can it be reversed once issued?

winding-up order

Updated: 15th February 2020

A winding up order can be used by creditors to enforce payment of a debt by a delinquent company. Often as an act of last resort, creditors petition the court to have the business liquidated, usually after several failed attempts to recover their money.

The expense of going through the courts to obtain an order of this type indicates their determination, and this is a method often used by large secured creditors such as HMRC and the banks.

The winding up order will have been preceded by a 21-day Statutory Demand for payment, and a winding up petition. Once the winding up petition has been accepted by the courts, a winding up order is granted and company liquidation follows.

Possible reasons why this stage has been reached

If your company has been threatened with a winding up order, your creditor will have lost faith in your ability to pay, and wants to recover their money as soon as possible. They may have extended you further payment terms prior to this point, that have also not been met, including the Statutory Demand for payment mentioned earlier.

Once the 21-day time limit for this payment has elapsed, the creditor probably feels that a winding up petition is the only way to recoup what is owed to them.

Generally, with this type of aggressive action the debt is much higher than the stipulated figure of ‘over £750’ as otherwise it would not be worth the costs of going through the courts.

The cost of winding up a limited company can fall anywhere between £1,490 and £1,990.

From your standpoint, you may have made determined efforts to meet the payment, but been genuinely unable to pay because of other debts, or an inability to collect monies due to your company. Alternatively, the market may have dipped resulting in lower than expected sales figures.

Unfortunately, however genuine the reason, creditor action such as this is very serious and could signal the end of your business through liquidation.

Criteria for the application

The creditor needs to meet certain criteria before the court will consider their application:

  • The debt must be more than £750
  • The creditor is required to send a 21-day Statutory Demand for payment of the debt

If the debt remains unpaid, the creditor is eligible to petition the court for payment.

What is the procedure and timescale of a winding up order?

Your creditor will ask their solicitor or legal team to apply for a compulsory winding up order. The winding up ‘petition’ is the name given to the application sent to court. It is reviewed by the court, and if passed, sent to the insolvent company.

It generally takes around 28 days in total for a winding up order to take effect.

Once you are in receipt of a winding up petition, you need to act quickly to save your company. There is a seven day time limit in which to take one of the following courses of action. It is advisable to seek the advice of a licensed Insolvency Practitioner at this time.

  • Pay all monies due to the creditor
  • Propose a Company Voluntary Arrangement – this is a formal insolvency procedure which provides extended payment terms, sometimes up to five years. It also allows the company to escape liquidation, and provides an opportunity for business recovery.
  • Place the company into Administration via an Administration Order. If the Order is granted, you will need to appoint an Insolvency Practitioner to value and sell company assets, with the intention of paying off the debt. Putting the company into Administration halts all legal action, including the winding up petition.
  • Dispute the existence or amount of the debt. You must be sure of your facts however, as you may be seen to be accusing the creditor of abusing the court system.

If you are unable to take any of these steps or have simply run time, once the court approves the application for a winding up order, the matter will be taken your hands and the liquidation process will begin.

The winding up petition is advertised in the London Gazette, where it will be seen by the banks and HMRC. This often results in the bank taking action to freeze company bank accounts in order to safeguard their money.

The Official Receiver will be appointed to sell business assets, liquidate the company and investigate directors for signs of misconduct or insolvent trading.

Can a winding up order be reversed once issued?

It is possible to reverse a winding up order already issued by the court. There are two ways in which legal proceedings can be stopped:

  • Anyone can apply to have the order rescinded within seven days on the grounds that the court did not have all the relevant facts when making their decision to pass the order.
  • An application to ‘stay’ liquidation proceedings can be made by the Official Receiver, an appointed liquidator, a shareholder of the company, or a creditor. This can be at any stage after the winding up order has been made, and includes both temporary and permanent staying of proceedings.

It is important to remember that the earlier you act to prevent a winding up order, the better your chances of success. Intervening at the Statutory Demand stage could significantly influence the outcome – your IP may suggest a Company Voluntary Arrangement or other insolvency procedure that would alleviate the creditor’s fear of non-payment.

Begbies Traynor offer same day meetings free of charge to companies in distress. This addresses the need for directors to take swift action on receipt of a winding up petition, and may help to prevent liquidation of the business.

Источник: https://www.begbies-traynorgroup.com/articles/insolvency/what-is-a-winding-up-order-and-can-it-be-reversed-once-issued

What Is a Winding up Order or Petition by Creditors and HMRC?

winding-up order

Updated: 6th November 2020

A winding up order is a court order that forces an insolvent company into compulsory liquidation – a process in which the court appoints an Official Receiver (OR) to liquidate all of the company’s assets in order to repay creditors. It results when HM Revenue & Customs or another creditor sends a winding up petition (WUP) to the court after the insolvent company fails to repay a debt of more than £750 which has gone unpaid for at least 21 days.  

Upon a Winding Up Petition being advertised, a company’s bank account will typically be frozen meaning business is immediately halted. While a WUP does not necessarily mean the end of your company, you will have to move fast if you want to save it and stop it being wound up.

Can a Winding Up Order Be Stopped?

Once the court has issued a winding up order there is nothing that can be done to stop the company from being completely liquidated. However, there is a short period of time during which you can take action to prevent the order from being issued in the first place.

It is important here to note the distinction between a Winding Up Order and a Winding Up Petition.

A Winding Up Petition (WUP) is the first stage of the process, and it is here where you can challenge the petition before it goes any further. You have a relatively short window of just seven days to mount a challenge or else pay the amount owed. A Winding Up Order occurs once the WUP is accepted by the court.

This sets the wheels in motion for the court to wind up your company and it is extremely difficult to save the business once things reach this stage.

Once you have been served with a WUP moving quickly is vital; you should contact a licensed insolvency practitioner without delay as every day that passes limits the options available.

Options after a Winding Up Petition

When HMRC or another creditor issues a winding up petition to the court it is reviewed, and once approved, issued to the insolvent company. After receiving a WUP options are severely limited.

You cannot sell the company or any of its assets, nor can you issue a Notice of Intention (NOI) to appoint an administrator.

The company cannot be placed into pre-pack administration, and the lihood of putting the company into Creditors’ Voluntary Liquidation (CVL) is extremely slim.

Upon receiving a WUP, the insolvent company has 7 days to do one of four things:

  1. Pay all debts owed to the petitioner (whoever is petitioning to liquidate your company, whether it be HMRC or another creditor).
     
  2. Arrange and propose a Company Voluntary Arrangement (CVA) to come to an agreement with the petitioner. Such an arrangement could allow you to repay the debt gradually over a period of up to 5 years, while also letting your company escape liquidation.
     
  3. Obtain an Administration Order to have the company put into administration, which would involve a licensed Insolvency practitioner being appointed as an administrator to evaluate and sell some of the company’s assets. During a court ordered administration all legal actions are stayed, which means the court will not issue the winding up order against your company.
     
  4. Dispute the debt. In order for this to be an option there has to be substantial proof that the debt claim is unfair or inaccurate. This is a serious allegation against the creditor known as “abuse of court process.”

What to Do If You’ve Been Issued a Winding up Petition

Of the four options above, pursuing a CVA is often the best course of action as this would allow you to come to a formal agreement with the petitioner as well as your other creditors at the same time while allowing you to continue to trade.

This would effectively save your company from liquidation and give you the time and space needed to trade its current debt problems. Unfortunately, the chances of getting a petitioner to agree to a CVA during this 7-day period are slim, especially if the CVA proposal is not drawn up by a professional.

Having a CVA proposal created and introduced by a licensed insolvency practitioner is the best way to increase the chances of an agreement being reached.

If the petitioner refuses to agree to a CVA then seeking an Administration Order may be the next-best course of action.

This would involve the company being placed into administration and an insolvency practitioner being appointed to market and sell some of your company’s assets.

Although the possibility of a pre-pack administration is not possible after a WUP has been issued, administration can still be a highly useful tool during this time.

In order for this to work the company will have to contact an insolvency firm immediately to give them enough time to assess the situation, draw up an effective administration proposal, and present it to the court before a Winding Up Order can be granted.

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* Figures provided by RedundancyClaim.co.uk

What Happens If a Winding Up Order Is Issued?

If you’re unable to successfully utilise one of the above options, and a winding up order is issued, there is nothing you or anyone else can do to stop the company from being liquidated. Still, there are preliminary measures you can take to minimise the possibility of directors being brought under post-liquidation scrutiny.

After liquidation the Official Receiver (OR) is given the task of investigating all actions taken by the directors during the time the company was trading insolvent. If evidence of wrongful trading is found the directors could be held personally liable for some of the company debts, or may even be banned from acting as the director of any company for up to 15 years.

By consulting with an insolvency practitioner as soon as you’re issued with a winding up petition you can receive valuable guidance and learn how to record the actions of your company to show the court that the directors fulfilled their duties while trading insolvent.

Contact us today and participate in a free consultation to find out how we can help your company avoid a winding up order after being issued a WUP. Our team of licensed insolvency practitioners can work quickly to devise a workable and robust strategy to combat your current issues. Call us today on 0800 644 6080 to arrange a same-day meeting with a licensed insolvency practitioner.

Источник: https://www.realbusinessrescue.co.uk/winding-up-petitions/what-is-winding-up-order

What is a Winding Up Petition by HMRC or Other Creditor

winding-up order

Once your company receives a petition you have fewer options available;

It is almost impossible to put the company into creditors voluntary liquidation.

  • You CANNOT sell the company or the assets, as this sale may be reversed by the Court
  • You cannot issue a Notice of Intention (NOI) to appoint an administrator 
  • You cannot issue new securities or charges
  • You cannot put the company into pre-pack administration

Other than paying up there are only a few other options. There may still be time to propose a Company Voluntary Arrangement if you act FAST… other options include taking legal advice on defending the petition. For instance, if the debt is not an agreed. But remember lawyers may not allow the company to make the payment as any payments might be voided in liquidation.

If the business IS VIABLE and has a good future, then administration is a very powerful means to defend your company against the petition. But now that your company faces winding up, an expensive court process is required (be prepared as court fees are not cheap!).

 The Court will need to consider the needs of all creditors and the petitioner, before granting an Administration Order.

An Administration Order, if granted by the court, will «stay» or stop the winding up petition and prevent a winding up order being made and any other legal action (except with leave of court).

The administrator, who must be a licensed insolvency practitioner, may propose a Company Voluntary Arrangement to protect the business and allow a repayment of debts for up to 5 years. Alternatively, it may be sold to a new company or buyers (including you as directors). See the administration guide pages here.

If the business pays the debt, remember it will have increased because of the costs of the plaintiff (creditor). The petitioner will want those costs paid too.

What if we do not agree with the debt, or not owe the debt claimed?

If the action is clearly unfair or an «abuse of court process» then you MUST take legal advice immediately.  Ali Akram of LexLaw has written a good piece on his blog about using a winding up petition as a debt collection tactic being an abuse of process.

Bear in mind that it is unly that if HMRC have issued a petition that it is an abuse of process.  They are sophisticated creditors and in most cases any tax bill is unarguable.

He points out that an unregulated debt collector used the winding up petition process to extract payments without really understanding enough about the procedure.

Examples of wrong doing include the following;

  • Not allowing enough time for the debtor to pay the amounts due
  • Not giving sufficient warning of legal action
  • Threatening to publicize the petition which is not in accordance with the regulations i.e. sending a copy to your bank.
  • Adding unreasonable costs to the application to put on further pressure.

Read the whole article here;

You may be able to legally prevent the petition from being advertised and indeed have it rescinded if it is considered an «abuse».

We can provide advice on this and our legal partners can assist you rapidly to STOP the Gazette advert by seeking, in rare cases, an injunction to restrain advertisement or by way of formal negotiation with the petitioner as appropriate.

Otherwise, in due course the petition hearing will be advertised in the London Gazette and the hearing will be heard in the High Court of Justice (Companies Court).

If the petition has already been advertised then the business could seek an adjournment of the hearing. However, in order to do this you will need sound reason(s). We have a good working relationship with expert lawyers who can analyse your situation and help you to obtain an adjournment where appropriate prices start at just £495. Call us on 08009700539. 

When is the winding up petition advertised?

The creditor must allow 7 clear days after the serving of the petition on your registered office, before the petition can be advertised in the London Gazette. It must be advertised 7 days before the petition hearing date.

The main reason that the petition is advertised is for other creditors to see that the company is insolvent.

They may then ‘piggy-back’ on to the same petition and make a claim for their own debt, serving a notice of support on the original petitioner.

It is possible to stop the advert if you act fast. Bear in mind, even if your company pays the debt and the advertisement is stopped, the case can still be heard at court and made public. That's why it's so important to take action before a winding up petition is issued!

Due to the recent Corporate Insolvency and Governance Act 2020 the rules around advertising have been amended.  Any requirements to publish or advertise the petition do not apply until the court has determined that it is ly to be able to make a winding-up order. 

Past case study — winding up petition

Directors of a media company came to us, after it had been served a winding up petition. They did not realise the significance of the advertisement of the petition being a public event and within 24 hours their bank account was frozen and so they could not trade.

In conjunction with our lawyers, we had to seek a validation order to unfreeze the bank account. In order to do this we had to produce, very quickly, a draft CVA along with forecasts. The order was granted and the petitioners were persuaded to support the CVA and withdraw the petition.

The company has now entered a CVA with a return of 55p in the £1 to creditors. 

What happens after the winding up petition is advertised?

At this stage the bank will find out and they will generally FREEZE the company's bank account to prevent any «disposition» or sale of assets at undervalue or other illegal acts by the directors. This can paralyse the company and stop it trading.

Actually it is not legally necessary for the bank to freeze the bank account, but most banks tend to do this. Important Note: Recently the banks have been employing agents to search the court register for companies that have had winding up petitions.

This means that they can find out BEFORE the petition is advertised! Either way if you receive a petition you must ACT.

Freezing of Company Bank Accounts and Assets 

Why do bank's freeze accounts? Well the technical answer is under section 127(1) of the Insolvency Act 1986, if a company is wound up, any sale of the company's property, any transfer of shares made after the commencement of the winding-up is void, unless otherwise ordered by the court. This means that it is very difficult for a company to continue to trade after a winding up petition is advertised. Banks therefore assume that they have to freeze the accounts to stop assets being dispositioned. It is a safe step in their eyes.

Note:  The recent Corporate Insolvency and Governenance Act 2020 has changed the insolvency law.

 The Act modifies existing insolvency legislation so that a petition won't prevent disposals of the debtor company’s property (which, for the purposes of the Act, are voided from the date of the winding-up order, rather than the date of the petition as is the usual position, unless the court orders otherwise).   But will that stop banks freezing accounts?  We can't be sure. 

A Court Hearing of the Petition For a Winding Up Order

The Judge will hear the petition and if the company cannot pay and there is no evidence or defence that it can pay in the future then the Judge will issue a WINDING UP ORDER.

  Once this has happened the Official Receiver will start the process of liquidating the company. You MUST respond to any requests for information and records by the Official Receiver or an appointed liquidator.

  Failure to do so, is a criminal offence

Once a company has been ordered to be wound up by the court, the Official Receiver or the appointed liquidator must investigate the activities of the company directors to ensure that they have acted properly and according to their legal and «fiduciary» duties.

If the liquidator believes that the directors are guilty of wrongful trading (see guide by clicking link) they may recommend that the directors are banned from all current and future directorships for a period of time up to 15 years; However this is quite rare

Directors potential personal liability for company debts 

If company directors are found guilty of continuing to allow a business to trade while they KNEW it was insolvent, they may become personally liable for the debts incurred by the company from the time they knew the business was insolvent. 

Paying the debt and then obtaining a «Validation Order» is generally the only way to get a new account opened and have the assets released by the bank. We can advise on this process but it requires an application to court and obviously not insubstantial legal fees. If you need advice on a validation order contact us. We have a very aggressive law firm ready to help your company.

If the petition is advertised and the company does not pay the debt, this will generally lead to the Official Receiver (OR) or a court appointed liquidator taking over to wind the company up. If the company has assets then an insolvency practitioner may be appointed by the OR.

How do I protect myself from personal liability if the company is wound up?

Read our guides for wrongful trading here.Director's disqualification here and compulsory liquidation here.

Make sure that all board and management actions have been carefully noted and the assets of the business have not been disposed of. DO THIS FROM AN EARLY STAGE OF INSOLVENCY.

Make sure all management accounts, company books and records and bank statements are available and protected. Act sensibly and promptly. Don't leave it too late to get help, the sooner you act, the more KSA Group can do to help your company and try to find some way of business rescue. 

Stopping a winding up petition

To find out more about how KSA Group can stop a petition, please read our business rescue stories and our page on stopping a winding up petition

Winding up petition case study.

Источник: https://www.companyrescue.co.uk/guides-knowledge/what-is/winding-up-petition/

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