What is a winding up petition?
"A winding up petition (WUP) is filed by a creditor to a court in respect of an unpaid debt of £750 or more. It is usually a last resort after other options have been explored to try to recoup the debt. The petition will ask for the company to be forcibly wound up if the creditor does not pay the debt or come to some sort of arrangement with the creditor in question"
What happens after a WUP has been filed?
"After a WUP has been filed at the court, you will not be able to sell your assets or company, put your company into a pre-pack administration or issue any new charges. The creditor who issues the WUP must allow 7 days after serving the petition before it can be advertised in the Gazette. It must be advertised at least 7 days before the High Court hearing. If you pay off the debt, the petition will still exist and creditors can attach to or “piggyback” on it to include their debt. However if your company doesn’t pay off the debt, it will go to the petition hearing, and it is likely that a Winding up Order will be issued."
What happens once a winding up order has been issued?
"If your company cannot pay the debt and there is no evidence it can be paid then the judge will issue a winding up order. The Official Receiver (OR) will start the process of liquidating your company or he will appoint an insolvency practitioner (IP) to act as liquidator. He will then follow the general liquidation process of winding up the company, selling off the assets, striking the company off the register and investigating the director(s)."
How is a WUP dismissed?
"A judge can decide to dismiss a petition if they think a company is able to pay back a reasonable proportion of the debt. It can also be dismissed if the judge believes there has been an abuse of the process by the petitioner. Other grounds for a WUP dismissal include: abuse of the process of a WUP by the petitioning creditor, the amount of debt is not proven or an agreement has been reached and/or the amount has been paid."
What are the possible outcomes of a WUP?
"This all depends on how you handle the WUP and the debt it relates to. If you pay the debt before advertisement, it should remove the petition and there will be no further impact on your business. If you pay the debt or come to a payment arrangement after advertisement, it will remove the debt on the petition but your bank account will have been frozen and another one of your creditors could piggyback the action. Before repaying the petitioning debtor after a WUP has been issued, it is always wise to take advice from an insolvency practitioner or a solicitor specialising in insolvency. If you can’t or won’t pay the debt, you will be issued with a winding up order by the court and your company will be wound up."
What if I pay the debt specified in the WUP?
"At what point you pay the debt depends entirely on how it will affect you. As mentioned above, before repaying the petitioning debtor after a WUP has been issued, it is always wise to take advice from a solicitor specialising in insolvency or contact us for free confidential advice. If you pay before advertising, you are likely to avoid any damaging impact on your business whereas if you pay after advertising, you risk other creditors piggybacking the action. If you have already paid the debt before the WUP was filed, you can dispute the WUP and as long as you have proof."
What can I do after being issued a WUP?
"Contact us as soon as possible to stop the petition before it escalates further. We can help you deal with this whether you are wanting to pay off the debt or just get some advice."
What is the role of the OR/IP appointed?
"Their role is to wind up the company and close it down, sell the assets, strike the company off the register and investigate the company director(s)."
Who can file a WUP
"A creditor who is owed a minimum of £750 can file a WUP to collect the debt they are owed. This is usually a last resort when all other attempts to collect the money have failed."
Who can dispute a WUP?
"The debtor company can dispute a WUP or a barrister/IP acting on their behalf."
Who will you need to contact if you have a WUP filed against you?
"You will need to contact the creditor or court of issue, ideally after taking professional advice."
Why would a WUP have been issued?
"It usually will have been issued because your company has not paid a debt to the creditor and they have tried a number of methods, to recover the money without success."
Where can a WUP be filed?
"A WUP should be filed at the High Court and once filed, there must be 7 days passed until it can be advertised and it must be advertised at least 7 days before the court hearing. The petition will be heard in the High Court where a judge will dismiss the petition if he believes there are grounds to do so or he will approve it and hand out a winding up order."
Where is a WUP advertised?
"A WUP is advertised in the Gazette."
When can a WUP be filed?
"A WUP can be filed when a debt is owed to a creditor and they have been unsuccessful in their attempts to recoup funds. They may have sent letters or taken legal actions, such as a CCJ or sending in the bailiffs. They must also be owed a minimum of £750 and have a good idea that they will not recoup the funds from the business by any other means."