Many businesses in the UK approach solicitors and Insolvency Practitioners because they were issued with a winding up petition they did not expect. These businesses owe their creditors at least £750, and for one reason or another, they have not been able to pay off this debt. As a result, creditors have petitioned to the court to wind up these businesses.
What can a business do to prevent a winding up petition?
It costs at least £2,000 to issue a winding up petition. If you have been served with a winding up petition, you can be certain that your creditors have sufficiently proven to the court that they have made several attempts to collect on the debt that is owed to them. In this regard, the court has just and reasonable grounds to believe that your company is either unable or simply unwilling to pay that debt.
If a business understands the rules relating to a winding up petition, you will be aware that you will only have seven days (from the petition) to file a response with the Court. During this time, the business will need to demonstrate to the court that they have a solid business plan in which the company will be able to satisfy those debts, otherwise there is a strong likelihood that a winding up order will ensue.
Once a winding up order has been issued by the court, there is no way to prevent your business from going into formal liquidation and as a result will be struck from the Register of Companies. However, if a company proceeds to act quickly, there are several ways to prevent a winding up order. For example, some companies may consider plans to restructure or reorganise through Company Administration whilst others may propose a Company Voluntary Arrangement.