The process to recover money by the use of a winding up petition and what the charges will be (with an example)
If your Company is served with a Winding up Petition the Creditor could after 7 business days from the date of service advertise the Petition in the Gazette and must advertise it at the latest 7 business days prior to the hearing date.
Normally this threat of advertising is used to negotiate a settlement prior to the hearing and if all is agreed the Petition can be withdrawn and the hearing vacated by a Consent Order.
However if negotiations fail or you simply do not respond to the Petition in time and the Petition is advertised, then the Bank will freeze your company accounts and you would require a Validation Order.
- You have a business debt with a limited company and the debtor has not paid you and there is no reason or dispute for the failure to pay
- You contact us by either completing the form below or you phone NIGEL on 07977923298 seven days per week between 8am and 9pm.
- We request from you a copy of the invoice/statement and all correspondence and notes relating to the debt
- Nigel will phone you to discuss and depending on the correspondence he will either accept your case or discuss with you alternatives, and if he accepts the case he will tell you that he needs to conduct a Red Flag Report on the debtor and asks for the fee for that which will be £150.00
- Upon receipt of a qualifying report Nigel sends a copy to you by email and then phones you to discuss the contents of the report that gives a company analysis and what he can do for you
- If the case is accepted we send out a 7 day Notice letter and send a copy of that letter by email and post to the debtor and in that letter we shall demand payment of the debt, interest on the debt, payment of our charges which will be 10% of the recovered debt
- If the debt and the charges are recovered after that letter you get back the recovered debt and interest. We get back 10% of the debt.
- If the debt and charges are not recovered or an acceptable offer to you is not received we shall nominate a solicitor from our panel.
- The solicitor will contact you and set up a file and we shall agree to pay the charges you need to pay to the solicitor and also pay to the solicitor, the money that the solicitor has to pay out to issue a winding up petition against the debtor.(The total charges are likely to be solicitors charges £5,000 plus Vat, money the solicitor has to pay :-out issue fee £302;insolvency service deposit £2,600 ;and process servers fee £150 plus vat, and the court fee to be paid to withdraw the petition £50.advertisement in the Gazette £184 (the money the solicitor has to pay out are called disbursements)
10 The solicitor will issue the petition and get a hearing date in about five weeks
11 The issue and service of the petition should cause the debtor to pay the debt and the charges for the reasons set out below explaining the detriment to the debtor company of not paying
Examples Here are 2 examples of what will happen when the debt is recovered.
EXAMPLE 7 Day Latter
(A) Say a £30,000 debt that has been outstanding for 1 year our charges will be 10% £3,000 to recover that debt after the 7 day letter. The debtor will pay £35,700 If the debt and charges are recovered you will get back £30,000 plus interest of £2,550 and recover the Red Flag fee of £150. We shall get £3,000.
EXAMPLE Petition
(B) Say a £30,000 debt that has been outstanding for 1 year after issue of the Petition the debtor will pay £35,700 plus solicitors’ charges to enable the Petition to be withdrawn by consent without it being advertised.
Our charges will be £6,000 plus 50% of the interest. The debtor will pay £35,700 plus £6,000 plus £3,162 =£44,862 If the debt and charges of £3,000 are recovered as claimed in the 7 day letter plus the solicitors charges and disbursements.
You will get back £28,425. The solicitor will get back £6,000 and will return to us £3,162 and shall pay us £6,000 plus 50% of the interest (£1,275) = £7,275.
The detriment to the debtor company if they do not pay up before the Petition is advertised
(which must be done 7 days before the hearing) are as follows:
(1) Once advertised, the company’s bank accounts may be frozen, halting all trading activities. This can lead to suppliers and lenders withdrawing support, exacerbating financial difficulties.
(2) The public nature of the advertisement can tarnish the company’s reputation and deter potential business partners.
Red Flag Alert
We are a member of Red Flag Alert (Insolvency Credit Referencing).
We supply you with an up-to-date credit report on the company you are looking to wind up, and it will show an in-depth and detailed financial view of the company.
You will pay a fee of £150.00 for the full report, and we shall use the report to assess the viability of funding the process.
Red Flag Alert report helps us to determine the risk structure and funding structure.
No Red Flag Alert: We could fund the whole process as per 6 to 11 above.
One Red Flag Alert: We could fund the whole process as per 6 to 11 above save that 15% will be substituted for 10%.
Two Red Flag Alert: We would not fund but would still help you with the process for a fee.
Three Red Flag Alert: We would not recommend proceeding with a Petition.
