Bankruptcy Petitions
When an individual has a liquidated and undisputed debt of at least £5,000, a winding up petition may be presented at Court against them by the person or entity who is owed money, in other words, the creditor. A Bankruptcy Petition precedes the bankruptcy of an individual and its function is to ask the Court to bankrupt the individual and have an insolvency practitioner recover their assets so that they can be sold and the proceeds distributed to the creditor. It is incumbent upon an individual to deal with the petition immediately and before the Court makes an order to bankrupt them.
Searches
Before issuing a Bankruptcy Petition, a creditor ought to check with the Companies Court as to whether another petition has already been presented against the debtor. The first petition is the one that takes precedence, regardless of its advertisement, and any subsequent petition is likely to be dismissed with an adverse costs order against the petitioner.
The team at Mercantile Barristers can conduct a winding up petition search for our clients who are intending to issue a petition via the Court which will confirm if any Bankruptcy Petitions have been filed. We will also confirm if any notices have been placed in the London Gazette.
Presenting the Petition
If the debt is below £50,000, bankruptcy petitions will usually be issued in the County Court nearest the debtor. Where the debt exceeds £50,000 bankruptcy petitions will usually be issued and then heard at the High Court of Justice, Chancery Division (Companies Court) at the Royal Courts of Justice (Rolls Building) in London. They can also be issued and dealt with at other regional High Court District Registries across the country.
Once a bankruptcy petition is issued, a hearing is listed and it is then served on the individual, usually by a process server visiting their home or place of work, or sometimes by first class post. Upon service of a petition, directors must act quickly to engage the petitioner. If the debtor has an individual voluntary arrangement (IVA) you will also need to serve a copy on the supervisor.
Our barristers at Mercantile Barristers specialise in presenting and defending bankruptcy petitions for the non-payment of a Statutory Demand or debt. Where necessary, our barristers could bring their considerable skills to negotiate debt with both creditors and debtors to achieve a settlement.
Injunctions
The advertisement of bankruptcy petitions is maintained on The Gazette website as part of a permanent official record and search engines start to exclude personal insolvency notices from their search results after the bankruptcy has been discharged – this can be after up to a year. This can be detrimental to an individual’s reputation. In order to avoid this, the individual may be able to negotiate with the petitioner not to advertise the petition, or may have to apply to the court for an injunction for the petitioner not to do so.
Our barristers at Mercantile Barristers can assist in delaying the advertisement of the petition to allow you time to enter negotiations with creditors.
Validation Orders
If a Winding Up Petition is advertised in the London Gazette, this is likely to cause the company, above all, financial embarrassment. This is because banks search the London Gazette daily and freeze company’s bank accounts upon discovering winding up petitions. The bank can also call in loans and overdrafts. A validation order allows a company to continue to trade and make payments from the company bank account even if the account has been frozen. Validation orders also lower the risk of personal claims against directors even if the company later goes in to liquidation.
Our barristers at Mercantile Barristers can assist in advising on, preparing and applying for a Validation Order from the Court to allow directors to access funds or dispose of the company’s assets in the event a company winding up petition is presented.
Winding Up Petition Court Hearings
Once the Petition is presented, or issued, the Court will list a hearing. It is important that the company is represented at the hearing to adjourn the winding up proceedings and prevent the Court making the usual compulsory order. If this is successful, it may be necessary that the company is represented at further hearings until the matter is eventually resolved.
Our barristers at Mercantile Barristers have experience advising clients on how to prepare for Winding Up Petition court hearings, and representing them at those court hearings.
How Our Process Works
You can call, email, or fill out an enquiry form to tell us about your case. One of our specialist clerks will speak with you to make the arrangements to advance your case.
Our specialist clerk will match you with the barrister with the expertise to deal with all aspects of your case. They will also obtain and organise the papers the barrister will have to consider in your case.
Our clerk will agree the fee for your consultation with the barrister beforehand. The clerk will then arrange a convenient time for you to have the consultation by video call, telephone or in person.
In the consultation the barrister will assess your legal position, devise a legal strategy, and give you appropriate advice on the necessary next steps to achieve your objective.
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