Compulsory Liquidations - Winding-Up Petition
Companies who fail to pay their creditors on time run the risk of being served with a Winding-Up Petition which could lead to the company being placed into compulsory liquidation by the court. Mercer & Hole can provide urgent advice to directors who have been served with a petition and are facing the threat of liquidation.
The majority of petitions are served by HMRC who use compulsory liquidation as part of their debt collection process. Mercer & Hole have experience of dealing with HMRC and their debt recovery department.
Immediate action to take after receiving a Winding-Up Petition
Once a Winding-Up Petition has been received it is important that advice is sought from Mercer & Hole as soon as possible. The petitioning creditor is required to advertise the petition in the London Gazette any time not less than both seven business days after it has been served and seven business days before the hearing. The advertisement of the petition has the effect of putting it on public record and can have serious consequences for the company, for example, the company’s bank account may be frozen or suppliers may suspend deliveries. Once advertised the petition must be heard by the court, even if the petitioner has been paid and other creditors can join in or be substituted for the petitioning creditor at the court hearing.
If contacted soon enough, Mercer & Hole can assist the directors with reassessing the financial position of the company. Mercer & Hole’s Licensed Insolvency Practitioners are able to advise and assist directors on options such as:
- Contesting the petition. A witness statement in opposition must be filed in court not less than five business days before the hearing date.
- Reaching an informal agreement with the creditors to settle debts over a period of time.
- Placing the company into an alternative insolvency procedure, such as a Company Voluntary Arrangement or Administration, which may allow the directors to retain control of the business and improve realisations.
- Placing the company into a Creditors’ Voluntary Liquidation which allows the directors to retain control over the process of the placing the company into liquidation.
Should a director receive a Winding-Up Petition professional advice should be sought from Mercer & Hole on the company’s financial position and the legal process. Our Partners and Directors are Licensed Insolvency Practioners who can provide you with advice tailored to your requirements.