Winding Up Petitions

When a company has a liquidated and undisputed debt of at least £750, a winding up petition may be presented at Court against the company by the person or entity who is owed money, in other words, the creditor. A winding up petition precedes the liquidation of a company and its function is to ask the Court to wind up, or dissolve, the company and have an insolvency practitioner recover the company’s assets so that they can be sold and the proceeds distributed to the creditor. It is incumbent upon the company’s directors to deal with the petition immediately and before the Court makes an order to wind up the company.

Searches

Before issuing a winding up 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 liquidation, winding up or striking-off documents have been filed. We will also confirm if any notices have been placed in the London Gazette.

Presenting the Petition

If the paid up or credited share capital of the company is below £120,000, winding up petitions will usually be issued in the County Court. Where the paid up or credited share capital of the company is above £120,000, winding up 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 winding up petition is issued, a hearing is listed and it is then served on the company, usually by a process server visiting the company’s registered office address or sometimes by first class post. Upon service of a petition, directors must act quickly to engage the petitioner.

Our barristers at Mercantile Barristers specialise in presenting and defending winding up 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 a winding up petition in the London Gazette is detrimental to the ongoing operation of the business. A company usually has 10 days from the date of the Winding Up Petition to it being advertised. To do this, the company 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 into 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.