If a company has been issued with a winding up petition, it is crucial to respond quickly in order to prevent liquidation or the bank from freezing the assets. There are different ways to prevent a Winding up petition from being served. Time is of the essence and you should seek legal advice as soon as possible.
We are leading experts specialising in insolvency proceedings. Our experienced City of London solicitors and barristers regularly assist companies facing a winding up petition; individuals served a statutory demand; or creditors owed money and considering issuing a winding up petition.
Paying off the debt owed
The easiest way to stop a winding up petition is to pay off the creditor to whom the debtor owes money. By paying the money they owe to the creditor, as well as the cost they incurred to bring forward the petition, the debtor should be able to stop the winding up petition.
However, it is good to note that if the debtor is having difficulties paying off the debt involving large sums of money, it is preferable to have a payment plan in place.
Communication between creditors and debtors
One way would be to making sure that the creditors’ requests for payment are not ignored.
If ever it happens that their requests are ignored, the creditors may serve you with a statutory demand as a means of getting their money back, which they can use as grounds for issuing the petition.
Anyone who’s owed money (the ‘creditor’) can make a statutory demand. A lawyer is not needed for that.
If the debt’s over 6 years old, you cannot usually make a statutory demand.
When the individual or company that owes you money (the ‘debtor’) receives a statutory demand, they have 21 days to either pay the debt or reach an agreement to pay or even apply for an injunction.
Disputing the debt
Another way one could (potentially) stop a winding up petition is to dispute the debt if there is a possibility to do so. If ever this is the case, then the debtor will have to inform the court explaining the reasons for disputing the petition.
Usually this option is taken only if the debtor has a solid evidence for disputing the debt.
Company Voluntary Arrangement (CVA)
Another option would be via the Company Voluntary Arrangement (CVA), meaning that a director puts their companies into a Company Voluntary Arrangement.
For this particular route, the debtor has to apply for a “stay of proceedings” that will halt the winding process while a CVA is negotiated. This will stop the petition going forward and instead aims to rescue the business and prevent it from entering into liquidation.
In order to carry out and negotiate the CVA, an insolvency Practitioner must be engaged to negotiate and carry out the CVA. The latter will have to work with the director to put together a plan for paying creditors back what they owe and a schedule under which they will do so. A CVA can last between 3 to 5 years.
In order to enter into a CV, the debtor will require the approval of 75% of creditors and 50% of shareholders.
The CVA is considered to be a very good option for insolvent companies that have real chances of recovering and returning to profitability and is one way to stop a winding-up petition from progressing into liquidation.
Entering into a pre-pack administration
This option of stopping a winding up petition has become very popular lately for businesses that are struggling. This option puts an insolvent company into administration and sells the company and its assets. If this process is chosen, it will nullify the winding up process. In order for this to happen, the sale of the business must already be agreed and arranged before it is put into administration. This guarantees that there is a suitable buyer for it.
For this option, an insolvency practitioner has to be appointed. They will carry out a thorough review of the company and its activities to establish whether or not it can be sold.
Furthermore, they will also assess whether any jobs and B2B relationships can be maintained. Only after the assessment and the confirmation of a buyer for the company the terms of sale can then be negotiated.
The advantage of pre-pack administration is that it will stop the winding up petition against the company and hence save parts of, if not all of the business.
We represent you at Winding up Petition Hearings
Although we are based in the legal heart of London, operating as the only law firm in the historic Middle Temple Chambers, we provide comprehensive nationwide coverage to represent you at any winding-up petition hearing. Our team of solicitors and barristers will prepare grounds of opposition and a witness statement for you.
We will represent you at the winding-up petition hearing and will provide our own barristers or external local counsel to any hearing across the country.
Not based in London? We provide nationwide representation
We will represent you no matter where you are based in England or Wales.
If you contact us through our contact form, by email or by phone, one of our winding-up petition team members will contact you by phone to discuss your matter and assess whether we can assist you.
If we can, we will arrange a conference with a senior member of our winding-up petition team. This meeting will take place either in person, via our telephone conference facilities or via Skype, depending on your preference. Therefore, no matter where you are based in England or Wales we can represent you.
Instruct Specialist Insolvency Lawyers
We provide a no cost initial case review to establish whether or not we can help you. We are a specialist City of London law firm made up of Solicitors & Barristers and based in the Middle Temple Inn of Court adjacent to the Royal Courts of Justice. We are experts in dealing with matters surrounding insolvency in particular issues. Our team have unparalleled experience at serving statutory demands, negotiating with debtors/creditors, setting aside statutory demands and both issuing and defending winding-up petitions vigorously at the Royal Courts of Justice (Rolls Building), the relevant High Court District Registry or County Court with jurisdiction under the Insolvency Rules.
Want legal advice from Insolvency Experts?
Our simple enquiry form goes immediately to our Insolvency team in Middle Temple, London. Call us on +442071830529 from 9am-6pm.
Please note that if you have been warned about your file being passed to HMRC’s Solicitor’s Office or have been served a statutory demand or winding-up petition do not delay in taking legal advice. Your matter can be handled more effectively the sooner you contact us.