What to Do if You Get a Winding up Petition or Statutory Demand

A Winding up Petition is issued by one of your creditors. This is normally a last resort by a creditor as they’re expensive to issue and there must be no dispute with the debt.

 

The creditor must have previously submitted a statutory demand which has gone unanswered. The creditor can face substantial costs if he issues a petition when he shouldn’t have done.

 

Statutory Demands are often used by landlords and by HMRC to try to get people to pay up.

After you receive a Winding up Petition, if you’re based in England you will have a seven day period to try to get it withdrawn before it’s advertised.

 

You don’t want it to be advertised as this will cause the bank to freeze your accounts which clearly makes life very difficult for any business.

 

In Scotland, however, there is no seven day period before the petition is advertised making Winding up Petitions even more serious for Scottish Companies.

When the Winding up Petition goes before the Court your Company could be liquidated unless you have a strong defence.

8 Days to Lodge your Defence……

You have 8 days to lodge your defence with the court. Your bank account will be frozen in this period so you’ll need to have personal funds available to pay wages, suppliers and legal fees to defend the petition.

 

If you don’t a liquidator will be appointed and your Company will be out of business.

 

Strategies to deal with Winding up Petitions

Of course you should never get to the stage where your creditor can issue a Winding up Petition.

 

First the creditor has to issue a Statutory Demand. If you respond to the Statutory Demand, informing your creditor that the debt is disputed he can’t issue a Winding up Petition. That will make life much easier for you.

The bottom line is that in both Scotland and England if there is a substantive defence to the debt the Court will strike out the petition.

 

According to Lord Hodge, in a judgement given at the Court of Session in Edinburgh “A winding up petition is not the process in which to establish the respondent Company’s liability to pay a disputed debt” He goes on to say “The petitioner will not be a creditor for the purposes of s124 if the respondent company shows that the debt is disputed in good faith and on substantial grounds. The court will normally dismiss the petition if it is clear that there’s such a dispute”

Do not be pressured into liquidation by an Insolvency Practitioner touting for business because of a winding up petition. You still have options and there are other strategies to deal with it but time is of the essence.

We’d be happy to have a short, free and  confidential call. You don’t even have to tell us your name until you feel comfortable. We’ll give you completely free and impartial advice.

 

As we’re not Insolvency Practitioners we won’t be pushing you in any particular direction. We’ll advise on what’s best for you and your Company.

If you'd like help with your restructuring and debt elimination strategy email: help@fortressrestructuring.com or contact us here

We can help with:

Debt Elimination

 

Winding up Petitions and Statutory Demands

 

Business Restructuring

 

Insolvency Strategies

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