Scunthorpe United served with a Winding-up Petition by HMRC

The future of Scunthorpe United football club has been jeopardised due to a Winding-up Petition filed by HMRC over an unpaid tax bill. Winding-up petition was served on the National League club on 11 January 2023, and is made when an unpaid creditor requests the courts to force a company into compulsory liquidation. A corporate restructuring specalist has been appointed to help find a buyer and the local MP is working to find a resolution to the club’s financial struggles.

Need a second opinion on your insolvency litigation? Our specialist solicitors & barristers can help by assessing your case prospects and whether a winding-up petition is the right tool. We have highly experienced dual-qualified lawyers, so if our view is your case has limited merit or high risk we can advise you of the best strategy in our first meeting.

Effect of a winding-up petition on a football club

When a winding-up petition is served on a company or a football club, it typically indicates that previous efforts to pay off debts have failed. The creditor in such a case uses the ultimate measure by stating that the club is unable to pay its debts and must be wound up. They file a petition with the High Court to request that the court dissolve the company. Southend United is one of the recent examples of such action.

When a football club does not pay its debts, a petition can be sent to the company by its creditors, with the most common creditor being HMRC. This is due to the high wages of players which results in a significant PAYE liability for the club. When payments to HMRC are delayed, it can provide the club with a temporary cash flow advantage. The time between a petition being sent and the hearing can range from 20-75 days.

Once the petition is advertised, it is in the public eye and creates concern about the future of the club. The bank may freeze the club’s account to avoid any disposal of assets. While the freezing of the account may not immediately lead to the club shutting down, it may lead to the club’s directors seeking insolvency proceedings, such as entering administration.

Closing down? We can help you oppose a Winding-up petition!

Our specialist winding-up petition lawyers are experts in defending winding-up petitions. We can advise you as to the specific merits and demerits of your case and can assist you in opposing winding up petitions and negotiating with creditors. If your company has been issued a winding-up petition or statutory demand, you may be able to challenge that petition on the following grounds:

That the debt alleged in the statutory demand or petition to be owing is genuinely disputed on substantial grounds by your company; Your company has a genuine right of set-off against the creditor that exceeds the amount claimed in the statutory demand; or In certain other limited circumstances (for example such as jurisdiction, technical or procedural error or delay).

To oppose a winding-up petition, you will initially need to file a witness statement in opposition with the Court within five business days before the date when the petition will be heard by the Court (rule 7.16 of the Insolvency (England and Wales) Rules 2016). A copy of that witness statement will need to be provided to the petitioning creditor at least five business days before the hearing.

Your company is entitled to appear at the petition hearing so as to oppose the making of a winding-up order. It is a routine matter for companies to instruct solicitors and/or barristers to appear on their behalf at the hearing.