Sole Traders

Has HMRC or a Creditor threatened or issued a Winding up Petition? Need advice on what is a Winding Up Petition or what your compnay can do about it?

Winding Up Petition - What does this mean for me?

Receiving a Winding up Petition can have very serious consequences for both you and your business.

The three main impacts of a winding up petition

The three main areas that company directors need to be aware of are summarised below:

1. Freezing of Company Bank Accounts

Winding up Petitions are advertised in the London Gazette. This will be identified by the company's bank, who will automatically suspend the company's banking facilities. The suspension will last until the petition is either granted or withdrawn. There is usually no way to prevent this once a Winding Up Petition has been issued.

2. Director Investigation

The liquidator must investigate the activities of the company directors. The purpose of the investigation is to ensure that the company directors have acted in accordance with their Directors Duties. If the liquidator believes that the directors are guilty of wrongful trading they may recommend that the director is banned from all current and future directorships for a period of time.

3. Possible Personal Liability

If company directors are found guilty of continuing to allow a business to trade while insolvent, they may become personally liable for the debts incurred by the company from the time they knew the business was insolvent. This is why you need to seek immediate professional help!

I Have received a Winding Up Petition - What Can I do?

1. Pay the Debt

If you believe the creditor's claim is genuine, you should make every effort to pay the petitioning creditor so that the winding up petition is lifted.

2. Contest the action

If you believe that the petition is unjust, you can contest the action. However, this will involve hiring a solicitor with associated costs. In addition, the company's bank will have to be involved to ensure that accounts are not frozen. Although, there is no guarantee that the bank will agree to this.

3. Liquidate the company yourself

You may decide that the company is not worth saving and agree that it should be wound up. If this is the case, it would be sensible for you to start a creditor's voluntary liquidation yourself. By doing so you are giving yourself more control of who is the appointed liquidator and the subsequent investigation of directors.

What TO do

DO call us on 0121 222 2422 now. We will discuss the issues facing your company and the options open to you in the strictest confidence and find you the best solution for your business.

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