Truro based law firm, Follett Stock LLP, has been served with a winding up petition by HM Revenue & Customs (“HMRC”) after failing to pay outstanding tax bills. The petition was served in August and the petition is dues to be heard on at the Companies Court on Monday 30 September 2013.
HMRC issued a formal statutory demand on Follett Stock several months ago in relation to unpaid taxes. Most HMRC Petitions result from a failure to pay outstanding VAT, PAYE or Corporation Tax returns or assessments. The firm’s managing partner, Chris Lingard, is yet to comment publicly on the proceedings.
In anticipation of the winding up petition hearing, the Cornwall Law Society has implemented an action plan to help clients should the law firm face financial difficulties or potential liquidation. The President of the Cornwall Law Society stated:
“The failure of any business is very sad, whatever the reason, as it has such serious repercussions for clients and staff. There have been rumours about the stability of Follett Stock both in relation to finances and other issues, so this comes as no surprise.”
It is understood that the Cornwall Law Society has put into place a contingency plan should Follett Stock become insolvent. The plan is likely to become effective once the financial future of the firm has been announced. This demonstrates the growing concern over the firm’s financial affairs, and whether it can avoid potential insolvency.
Next Step: Winding Up Petition Hearing
The winding up petition hearing on Monday 30 September 2013 may well determine the future of Follett Stock. It is unclear whether the amount HMRC are claiming will be paid off before the hearing or if an agreement will be reached between both parties.
Specialist winding up lawyers consider the likely outcome of the hearing is that if Follett Stock does not pay off the outstanding debt, it may seek an adjournment for settlement or for a CVA or CVL failing which it may well face a compulsory winding up order, which may spell the end for the cornish law firm.