Sometimes winding up petitions are forced onto a company. If this has happened to you and you are unsure what to do now, make sure to speak to our team.
We can support you through the WUP process and help you when it comes to what is best for your business. Please contact us now using the enquiry form for more information.
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If your business is in the unfortunate position where it isn’t possible to continue trading any more, then you may find yourself in the position where a winding up petition is enforced upon it.
Retail has been especially badly hit in recent years, with established high street names that have enjoyed a dominant presence for decades now being consigned to the history books.
This is down to incredibly tough trading conditions, so it should come as no surprise that winding-up petitions are on the rise.
Regardless of how the business came to be in the position where it can no longer realistically operate, the overall outcome is just the same. It’s not a position anyone would wish to be in, but if the courts do need to get involved then you’ll need to know what to do next.
You’ll also want to know what it means for your staff, your premises, and for you in possible future ventures.
But, what is a WUP, and what does it means for you in terms of costs and losses? Why does HMRC need to get involved? Can a winding-up notice be reversed? We try to answer these questions clearly in the following article;
Let’s start with, ‘What is a winding-up petition?’ When a business is no longer capable of paying its debts then the courts and the businesses’ creditors get involved and a winding-up petition is applied. But what needs to happen for it to get to this stage in the first place?
A winding-up petition is the last stage of a system designed to give a business every opportunity to pay its debts and keep on trading. The first stage will involve the party that the business owes money to applying for a Claim.
This is a High Court judgement that states you have a debt of at least £750 with said company and you have 21 days to settle it. If this Claim is not paid for within the allotted time frame then HMRC (https://www.businessdebts.org.uk/hmrc-debt/) or another creditor will apply to the Court for a winding-up petition.
Once a winding-up petition has been approved, this means that the businesss will have to go into compulsory liquidation in order to satisfy the debts the company has built up.
It doesn’t matter if you run a local shop or a multi-national chain of stores, the WUP is the same. Once it has been issued you are pretty much powerless to stop the company from going into liquidation - https://www.businessdebts.org.uk/cvl/.
You are not allowed to sell its assets as this may be reversed by the Courts and you cannot preempt it by entering into pre-pack administration. Usually what will happen is;
Once an HMRC wind up notice is served and advertised then the business will find it almost impossible to continue trading. Since the sale of assets and transfer of shares is prohibited during this time, it has no cash flow to speak of.
The advertisement in the Gazette is to let other traders know that the company is being wound up. In effect, it is a warning not to trade with it any more.
If your business has failed then a ready supply of cash will probably not be at your disposal, but a WUP does not come for free either. It can cost between £400 and £800 just to issue, and then you have the filing fee and the Court deposit on top of that.
These cost an additional £280 and £1,600 respectively, so you can be looking at a bill of around £2,000 just to wind the business down.
During this period it is highly unlikely that you will be able to retain your staff members any more.
Unless you have a viable plan to stop the winding-up process you should inform them that unfortunately, they will need to start looking for new jobs in the nearby and surrounding areas.
If you want to know how to stop a winding-up petition then your options are incredibly slim. You could pay what you owe, but if things have got to this stage then this is a pretty unrealistic option.
The Court may grant you an Administration Order, which prevents the winding-up order being made.
Again, this might be unrealistic as the Court will have to take into account the amount of debt that you owe (including the winding-up costs) and be satisfied that you can pay them before agreeing to let the company carry on trading.
The closest chance you will get to keeping the business alive is a Company Voluntary Arrangement.
A CVA (https://www.businessdebts.org.uk/administration-cva/) can protect the firm for up to five years while it pays back its debts, but the chances of pulling together a deal in time to save the organisation from liquidation is slim.
A business wind up is never an easy experience and it can have repercussions for you in the future. If you act sensibly throughout the wind up process by cooperating fully and don’t try anything underhanded in a last-ditch attempt at a rescue, then you won’t be personally liable for any company debts.
However, if you are found to have acted in an unscrupulous way then you could be prevented from being the Director of any company for up to fifteen years.
Enquire now if you are looking for a service near me with a tried and tested method of helping businesses to make the most out of a winding up petition - then give us a call.
We will be respectful of the circumstances and give you the best possible advice and service to transition this difficult period to find the best possible solution for everyone involved.