What is a Winding Up Petition?
If you’ve received a Winding Up Petition, your company could be set for a turbulent time ahead. In its simplest terms, a Winding Up Petition is a last resort used by HMRC or other creditors — such as utility companies — to recoup money that’s owed to them.
The seriousness of a Winding Up Petition can’t be understated. When a creditor is successful in issuing an order, it may force your business into compulsory liquidation, and all the effort you put into building your company may be lost.
Compulsory liquidation takes away your ability to trade under your company name, which can lead to further mounting debt. Acting too quickly may lead to you making the wrong choice, but not acting fast enough can see your business shut down permanently. To give yourself the best chance, it’s important to understand the Winding Up Process in greater detail to find the most viable option to defend your company.
Who Can Issue a Winding Up Petition?
A significant number of Winding Up Petitions are issued by HMRC — the UK’s tax, payments and customs authority. It’s their job to ensure businesses pay the correct amount of tax and on time. In certain cases, a company may be able to pay its tax bill, but a little time is needed to secure payment. It’s in these scenarios a company can be issued with a Winding Up Petition.
While HMRC is the most common creditor to issue an order, they can be sought by anyone via the assistance of a solicitor, as long as the debt is over £750. A company cannot have more than one petition against it, but other creditors you owe money to can join the existing one as a supporting creditor. Whether they can join is dependant on two key aspects:
- They have evidence that shows you’re indebted to them.
- The initial petitioning creditor allows them to provide support.
Utility companies — such as British Gas, E.ON, and Scottish Power — will often seek to join a petition once it’s become a matter of public record that a business has been issued with an order, highlighting the fact they may be trading insolvent. This can make it more difficult to defend your case, and will result in you having to pay all debts if the creditors are successful.
The Consequences of Receiving a Winding Up Petition From Multiple Creditors
When more than one company supports an order, your case can become more complex, and your company could be hit with a series of tough limitations as well as reputational damage.
Your business’ name will more than likely end up in the Gazette. If this happens, all your creditors and suppliers will know you’re in financial distress. Acting swiftly can prevent this, though, so it’s important to seek professional advice as soon as possible.
In a worst case scenario, your company may be forced to stop trading, as it’s possible your bank will freeze your company account. If this happens, you won’t be able to accept any payments or pay off any other bills, leading to greater financial difficulties. It will also make it much harder for you to gain new custom, as people will assume you won’t be around long enough to fulfill your end of the contract.
What Options are Available?
Your reputation can be seriously affected if you’ve received a Winding Up Petition from multiple creditors, but there are always options available to you. Asking for help sooner rather than later will keep more of these routes open.
Negotiation
Negotiating with your creditors can give you some breathing room, but the companies involved will need to see you’re taking the situation seriously before agreeing to give you more time.
The TaxDebts team can negotiate on your behalf. We’re well known by HMRC’s Enforcement and Insolvency departments for working hard in everyone’s best interests, which means our reputation could help swing things in your favour.
Validation Orders
Having your company bank account frozen will put even more pressure on your finances, but a validation order can give you back access to your funds. In turn, this gives you a greater chance of keeping your business from going under, as you have the opportunity to pay creditors, suppliers and employees.
A validation order has to be granted by the courts, and a judge has to be satisfied that you can make the necessary payments. Our team has gained orders for a variety of different businesses all facing their own unique problems, so we’re in a great position to help you, too.
The sooner you instruct us to help, the better. A validation order can do more than just help save your business; it can help you from a reputational point of view and stop you from going further into debt.
Court Representation
If your creditors are taking the case to court, you’ll need the best person to represent you to ensure the best possible chance of success.
HMRC and utility companies will have access to expert solicitors, so it’s only fair that you have specialist representation, too. Over the many years we’ve been helping businesses with their financial issues, we’ve formed great relationships with leading barristers. Our in-house legal team will instruct the right professional to handle your case.
Recissions
A judge may feel as though the best course of action is to implement the Winding Up Petition placed on your business, but you can still fight the decision.
The judge’s order can be reversed, but only if you apply for a rescission within seven working days of a Winding Up Order being passed.
Dismissals
In some cases, it may be possible to have the Winding Up Order dismissed completely, but this is a very difficult path to tread and requires expert guidance from start to finish.
We’re upfront with our clients about their chances of success and will only present this as an option to you if we think it’s viable. Your creditors must have made a substantive error for this route to be applicable.
The worst thing anyone can do once they’ve received a Winding Up Petition is bury their head in the sand. The problem won’t go away by ignoring it, so make sure to seek professional advice as soon as possible.
The TaxDebts team is here to help. We’re experts in our field, and we don’t believe that having multiple creditors supporting an order means the end of your business.
Whether you want to unfreeze your company bank account or if you’re looking for suitable court representation, we can help. There are many options available to you, but we can only keep them open if you act fast. Get in touch with us today for more information, and we’ll help you make the right choices to save your company.
The worst thing anyone can do once they’ve received a Winding Up Petition is bury their head in the sand. The problem won’t go away by ignoring it, so make sure to seek professional advice as soon as possible.
The TaxDebts team is here to help. We’re experts in our field, and we don’t believe that having multiple creditors supporting an order means the end of your business.
Whether you want to unfreeze your company bank account or if you’re looking for suitable court representation, we can help. There are many options available to you, but we can only keep them open if you act fast. Get in touch with us today for more information, and we’ll help you make the right choices to save your company.
