Company Winding up Petitions Question

[qazmko]

I'm currently working with a company who have been knocked for quite a bit of money.

They are going through the motions of re-financing some machinery just in case their claim isn't successful and they are left with a big dent in the bank balance.

The company has received a letter from one supplier in particular stating that they should pay the bills etc (understandably) and that if not received by xth by xxhrs then a winding up petition would be raised..

Our guys have put the letters forward to a solicitor but I thought I had read (on here possibly) that winding up petitions/threats of them should not be used as means of 'debt collection' and could be seen as an abuse of process within the courts.

Is that so?

[Openlaw15]

Re: Company Winding up Petitions Question

Hello Qazmko

Sorry to hear of this threat for company/ bankruptcy/ wind up petition.
@Kati ..for signposting. Possibly @R0b @ [MENTION=48934]Debt Camel[/MENTION] @des8 [MENTION=6]Amethyst[/MENTION], and whomever else.

[R0b]

Re: Company Winding up Petitions Question

Generally, winding up proceedings should be seen as a last resort and as you have pointed out, not a means to force a company to pay a debt which is owed. There are other means which may be appropriate such as litigation, ADR etc.

A company can be placed into compulsory liquidation by a court for a number of reasons but the most common and appropriate one here is that the company is unable to pay its debts. There are two tests, the cash flow test and the balance sheet test. The former is where the court will seek evidence to show that the company is paying its debts as they are due, whereas the latter is a shortfall in the difference between the company's assets and the liabilities that it has. The court will determine all of this on a factual basis after all evidence is submitted.

The usual route to show the above is either for them to serve a statutory demand which they have 3 weeks to pay up or it will be deemed that they are unable to pay their debts or, for the creditor to obtain a CCJ and the company fails to pay it within the specified period.

The winding up petition has certain requirements and procedures which must be complied with such as putting a notice in the London Gazette, so it is usual for a solicitor or barrister to do all of this and represent them in court on the winding up hearing.

Note: If there is a disputed debt, then the winding up petition will usually be dismissed.

[Debt Camel]

Re: Company Winding up Petitions Question

Not an area I know anything about - good luck!