Since the lifting of the moratorium on winding up petitions, we have received many enquiries from creditor clients who are owed money by companies and by companies who have been served with a statutory demand and are being threatened with the presentation of a winding up petition.
The purpose of issuing a winding up petition is to have the company wound up by the court, which places the company into compulsory liquidation. The threat should not be made lightly and should not be ignored if your company is at the receiving end of the threat.
A company can be wound up if they are unable to pay their debts as they fall due. A creditor should issue a statutory demand first if they are owed in excess of £750.00. If a company then fails to pay the sum owed in accordance with the statutory demand i.e. within 21 days of being served with it, it is deemed unable to pay its debts and winding up proceedings can be commenced.
However, a winding up petition must not be presented if the debt is genuinely disputed on substantial grounds or if the company has a cross claim that exceeds the debt demanded by the creditor. These issues should be considered immediately when you either receive a statutory demand or are considering serving one, particularly as the presentation and advertisement of a winding up petition can have disastrous effects on a company. Once advertised, it is likely that the company bank accounts will be frozen and suppliers will cease to trade with them.
If a company is served with a statutory demand or threatened with the presentation of a winding up petition, they should immediately seek legal advice to ensure that they are able to comply with the demand or respond before a winding up petition is presented. If you have received a statutory demand, or a demand letter, do not hesitate to contact us to discuss this.
If the debt demanded is disputed or the company has a cross claim exceeding the debt demanded, there is action that can be taken to seek to prevent the presentation of a winding up petition. We can assist by responding to the statutory demand with details of the cross claim or dispute and seek an undertaking that a winding up petition will not be presented. If an undertaking is not forthcoming, we can apply for an injunction restraining the presentation of a winding up petition, or advertisement of the petition if this has already been presented.
Whether you are a creditor contemplating winding up proceedings, or a company who has been served with the threat of winding up proceedings, please do not hesitate to contact the commercial team at James Legal for advice at email@example.com.