Winding Up Petitions READ THIS FIRST!
If you receive a winding-up petition, it will state the debt the petitioner claims you owe and the date on which the court will hear the petition. The pressure is now on you, as the petition can be advertised, which may result in your bank account being frozen and other creditors being notified of the petition.
Petition following a Statutory Demand
Prior to receiving a Petition your company could have been served with a Statutory Demand Rule 7.3 SD 1under s123(1)(a) of the Insolvency Act 1986 (served at your companies registered address). You have 21 days to either make payment or if you contest the debt make an Application to the High Court for an Injunction (to prevent the serving of a Petition).
Petition with no Statutory Demand
Petition following a County Court Judgment Order or a Letter of Formal Notice under s122(1)(f) of The Insolvency Act 1986 (The company is unable to pay its debts when fallen due) Normally you get some notice but can be just 3 days to take same action as above.
Prior to a Petition Ask for an Undertaking
They undertake not to present a winding up petition against your Company based on the statutory demand or Notice while you negotiate
Defence
- You can prove that there was an ongoing dispute prior to the Petition
- You have a Counter Claim for more than the debt amount.
If the above fails to resolve the issue then you must make an Application for an Injunction.
Injunction Application
You would be required to complete Form IAA Rule 1.35
Statement in Support (Exhibits if required) you must give full details of your defence and submit any supporting evidence.
Your Application must be either E-Filed, Emailed/by Hand to the court and a fee of £302 will be taken.
If the Application is successful then the court will contact you with a Preliminary Hearing date (this can be just a few days away so make sure that you either have a Barrister or that you can attend yourself. The Hearing will be short about 20 mins and if the Judge agrees that you have grounds for an Injunction then a date will be set for the final hearing but if the Judge is not convinced of your defence then it will be dismissed on the day.
Demands not Defended or Application for Injunction or Hearing not Successful
Petition received
When the Petition has been served, at the worst you only have 7 days from receiving the Petition before they can advertise it in the London Gazette.
Advertisement in the London Gazette
1. It cannot be advertised within 7 days of service of the petition on the company.
2. It must be advertised at least 7 days before the hearing the provision is 4.11.
Withdrawal of the winding up petition by the petitioner
This allows the petitioner to withdraw Usually after the debt has been paid or if it is obvious that there is a defence to the debt that forms the basis of the petition Conditions are:
1. The petition has NOT been advertised
2. No notices in support have been received by the petitioner
3. No notices in opposition have been received by the petitioner
4. The company against which the petition has been taken out consents
The Mechanism to get it withdrawn
The petitioner lodges with the court a Form 4.8
The provision is 4.15
Opposition by the Company
- It must file an affidavit in opposition with the court at least 7 days before the hearing of the petition
2. It must serve a copy at the same time on the petitioner. The provision is 4.18
If the petitioner withdraws anybody else can apply to have themselves substituted if they would have a right to present a petition. The provision is 4.19
The company bank account will be frozen
Other creditors will see the advert and become a supporting creditor and have the right even if the petitioner decides to settle the debt.
Once the Bank knows about the petition any money it gives you can be reclaimed by the creditors, that is why it freezes your account and the only way to unfreeze it is to obtain a Validation Order
Validation Order
A company against which a winding up petition has been presented may apply to the Court after the presentation of a petition for relief from the effects of s127(1) of the Act, by seeking an order that a certain disposition or dispositions of its property, including payments out of its bank account (whether such account is in credit or overdrawn), shall not be void in the event of a winding up order being made at the hearing of the petition (a validation order is a costly process and should be avoided).
