Liquidation can be either a compulsory liquidation or voluntary liquidation.
Creditors winding up petition – An application is made to the court by one or more creditors of the company stating that the company owes £750 or more and they cannot pay.
If a creditor’s winding up petition is issued against your business, then you need to act fast as a successful application to the court could result in the petition being advertised. The petition being advertised could have incredibly damaging results for your business. Suppliers will know that the company is in trouble, and the company bank may take steps to freeze the company account. Therefore you should seek legal advice immediately.
If you believe your company may become subject to a winding up petition and you would like to have a confidential discussion with a member of our team as to the implications of this, please make a free enquiry. We will call you back at a time that is suitable for you, or you can contact us directly on 01908 414990.
When Altion Law Assisted And Stopped The Company Collapse
Preventing HMRC Winding Up A Company Over Unpaid Tax
Altion Law was instructed by a Ltd Company which had been placed into a potential liquidation. This was following Insolvency proceedings issued by HMRC for unpaid tax. HMRC had alleged that the company had deliberately avoided tax, and defaulted on payments. HMRC had issued a winding up petition based on these allegations, which had led to the company bank accounts being immediately frozen.
Previous lawyers and accountants, had advised the client that there were no prospects of contesting the insolvency action and that the company should be liquidated. The Director wished to fight for his company, and approached Altion Law for a specialist opinion. Altion Law considered the facts of the matter, and advised the company on options. Representation in court commenced to oppose and contest the wind up action, on the basis that HMRC had made some errors and false allegations.
A successful interim application was also made to obtain an immediate Validation Order. This was so that the company could continue trade, whilst the wind up petition was heavily contested. Then settled before the main court hearing.
Altion Laws involvement and action resulted in the petition being dismissed. This permitted the company to continue operating successfully again.
If the debt is disputed this should be raised with the creditor immediately setting out why the debt is disputed in full. Winding up proceedings are not the appropriate way to deal with a disputed debt. The courts do not take favourably to parties that attempt to wind up a company over a genuinely disputed debt. Where the debt is disputed the application should be withdrawn, and the matter dealt with as a dispute instead.
If the debt is not disputed, and the company can pay, arrangements should be made with the creditor. This should be as soon as possible, to pay any outstanding debt which is due. The creditor’s application to the court should then be withdrawn.
Be aware that there are very tight timelines in insolvency. You should seek legal advice immediately, to understand your options.
If the creditor refuses to withdraw the petition, in circumstances where the sum should not be paid, the company should consider making an application to strike out the petition. Alternatively, they can prevent the petition from being advertised, depending upon the circumstances.
On the other hand the petition could be struck out by the court. This then usually means you are usually in a position to recover your costs. If the petition is not struck out, then the matter will continue to a full hearing. Should this be the case, you will need to look at taking steps to defend the petition if appropriate.
Have You Received A Winding Up Petition From HMRC?
If you have received winding up petition from HMRC with the intention to close your business, then you need to act quickly. It would be recommended to seek advice from us. We have many years of experience in speaking and dealing with HMRC. Our experts are able to take preventive measures to help your company to respond. Then to discuss a Time to Pay arrangement.
We do suggest that you seek legal advice, as to whether you have any grounds to defend the winding up petition. Acting quickly on this, so that you can respond to the proceedings. It is possible that the debt is not due, the debt is disputed. This may have a cross-claim, or procedure not been adhered to.
As a creditor, HMRC can petition the court to put a company into liquidation. This can be as well as, to make an individual bankrupt to settle tax debts. This is permitted even where an assessment is under appeal. It can also apply when awaiting a tax tribunal hearing where the collection of tax is not postponed.
Voluntary liquidation is where the company is voluntarily put into liquidation. This allows the company to be wound up by an agreement.
Members Voluntary Liquidation
The members of a company are able to take steps voluntarily placing the company into liquidation. The directors of the company must be able to make a statutory declaration that the company is solvent. Stating that the company is able to pay its debts in full. This would be within a specified period, not exceeding 12 months of winding up commencing.
Creditors Of Voluntary Liquidation
If the company is insolvency however, the creditors may voluntarily appoint a liquidator. This liquidator will then sell the assets of the insolvent company, with all proceeds being distributed to the company’s creditors. At the end of the liquidation, the company is then dissolved.
A company may go in to a creditors voluntary liquidation, or CVL. This can be after the company directors realise that its liabilities exceed its assets. Alternatively because they cannot pay its debts as they fall due, and so the company cannot carry on its business.
If you believe your company may become subject to a liquidation or you are considering issuing a winding up petition against another company, and you would like to have a confidential discussion with a member of our team as to the implications of this, please make a free enquiry, or email us on firstname.lastname@example.org and we will call you back at a time that is suitable for you or you can contact us directly on 01908 414990.