We have a debtor who won’t pay us. We think they’re are just stretching payment. Tell me about winding up

Our advice on debtor collection is usually to ensure that firm controls are in place. Make sure that you credit check every new customer and periodically check existing customers. We recommend Creditsafe or Red Flag as good important credit management tools.

But what if the normal debtor controls and credit management have been exhausted and a company has not paid and looks like it will not pay!?

The issue is one that many solicitors can advise on, but we would recommend that you shop around carefully when choosing a debt enforcement company. Getting solicitors involved can add costs to an already difficult problem.

So how do you wind up a company?

This is the most serious action that can be taken against any UK company by a creditor (that’s you). Often the company has breached any trust the creditor had, payment deals have failed, cheques bounced and generally the directors have not kept their word to pay. So the creditor may than go for the “nuclear” option. To issue a winding up petition requires a series of steps to be followed. It requires a firm and steady nerve and the debt or part of the debt is NOT DISPUTED by the debtor. Generally a winding up petition (WUP) costs say £300-800 to issue PLUS £1,190 court deposit and the filing fee. So it is a serious step to take for you. So it is important that you don’t waste this money. Be absolutely sure that the debt in question is not in dispute. If some of the debt is in dispute, then petition only on the undisputed amount. If the debt is all in dispute then issuing a petition can be regarded as an abuse of the Court process and COST you more money. Assuming debts of over £750 are not in despite then your first step is as follows; Write to the customer saying that you have now lost patience and will be issuing instructions to your solicitors to wind up the company. State that you will accept contact from them to offer to settle the debt but that from next Monday, you will be issuing legal action that will COST them more money. AND if you issue a winding up petition that could lead to their trading bank account being frozen and they will not be able to sell the assets, sell the business or apply for liquidation? If there is no reply, follow that up with a call to the MD, the FD or the accountant in the customer. Ask if they have received the letter and do they understand that if you issue a winding up petition that could lead to their trading bank account being frozen. Secondly, do they realise that they will not be able to sell the assets, sell the business or apply for liquidation?

If you are unable to get a reply or speak to anyone then instruct the solicitor to issue the petition.


Process of issuing a petition: An application is made to the high court (PETITION) to ask the court to wind the debtor company up. The process is a very legal and technical one and it is likely that the customer will under estimate the impact of receiving it. Your solicitor will guide you through the process, The Court will usually grant a hearing date to "hear" the petition this is often 30-60 days after the petition is served. If the debtor company does not respond, or if no defence is mounted, then it’s usually a matter of the judge issuing a WINDING UP ORDER.