The process

A creditor will usually pursue a debt for a considerable amount of time to recover money before employing a third party to deal with this for them and/or considering issuing a winding up petition. If the third party, like a solicitor or debt collector, also fails to collect the money, then a creditor may be left with few options but to serve the petition.

The cost of serving the petition is quite high but if the creditor feels there is a high likelihood of monies being recovered, then it is an effective solution to this problem. If the debt has not been recovered after notification of intent to collect, through a statutory demand, or a deal between the company and debtor was made and not stuck to by the company owing, then a winding up petition is very likely to be granted.

A winding up petition application is likely to be granted if the creditor can prove:

• The debt is unchallenged by the company owing
• Attempts have been taken, by the creditors and/or a third party working on their behalf, to recover monies have been taken
• The company owing is not willing to pay monies or discuss terms with their creditor.

If you run a business that has had a petition advertised in The Gazette, then your business is all but lost. When this happens, your bank and any lenders will freeze your company accounts. So even if you have money in your account or cheques to pay in, you will not be able to do this to pay off your debts. Effectively the company will cease to trade.

Once the petition is issued, a court date will be granted to wind the company up and appoint a liquidator. The company has a period to pay the debt, or defend its actions in not paying its debts, after they have been served with the winding up petition.

All actions, including issuing of the petition and the subsequent hearing, take place in the High Court and require the presence of a barrister. The costs of defending your company after a petition has been issued are high.

If you pay your creditor in the period after the issuing of the petition, you must still attend a winding up hearing at the High Court. After the issuing of the petition and before the court date, especially after advertisement in The Gazette, it is possible for any other creditors of yours to learn of your company’s current position. They can then attach or ‘piggy-back’ on the action substituting their debt for the one you have paid off already.

At the hearing, a winding up order will be issued as a result a liquidator will be appointed by the courts. He will sell assets and investigate your company for any wrongdoing.

HMRC’s use of winding up petitions

A creditor will usually pursue a debt for a considerable amount of time to recover money before employing a third party to deal with this for them and/or considering issuing a winding up petition. If the third party, like a solicitor or debt collector, also fails to collect the money, then a creditor may be left with few options but to serve the petition.

The cost of serving the petition is quite high but if the creditor feels there is a high likelihood of monies being recovered, then it is an effective solution to this problem. If the debt has not been recovered after notification of intent to collect, through a statutory demand, or a deal between the company and debtor was made and not stuck to by the company owing, then a winding up petition is very likely to be granted.

A winding up petition application is likely to be granted if the creditor can prove:

• The debt is unchallenged by the company owing
• Attempts have been taken, by the creditors and/or a third party working on their behalf, to recover monies have been taken
• The company owing is not willing to pay monies or discuss terms with their creditor.

If you run a business that has had a petition advertised in The Gazette, then your business is all but lost. When this happens, your bank and any lenders will freeze your company accounts. So even if you have money in your account or cheques to pay in, you will not be able to do this to pay off your debts. Effectively the company will cease to trade.

Once the petition is issued, a court date will be granted to wind the company up and appoint a liquidator. The company has a period to pay the debt, or defend its actions in not paying its debts, after they have been served with the winding up petition.

All actions, including issuing of the petition and the subsequent hearing, take place in the High Court and require the presence of a barrister. The costs of defending your company after a petition has been issued are high.

If you pay your creditor in the period after the issuing of the petition, you must still attend a winding up hearing at the High Court. After the issuing of the petition and before the court date, especially after advertisement in The Gazette, it is possible for any other creditors of yours to learn of your company’s current position. They can then attach or ‘piggy-back’ on the action substituting their debt for the one you have paid off already.

At the hearing, a winding up order will be issued as a result a liquidator will be appointed by the courts. He will sell assets and investigate your company for any wrongdoing.

The law and winding up petitions