Guides

We are a Scottish registered company and a creditor has threatened a winding up petition. Is the procedure in Scotland different to that in England? Yes, the winding-up petition process in Scotland is significantly different and often more immediate than in England, which can severely limit a company's options. The key difference lies in how and when the petition is made public.The Process in England In England, after a winding-up petition is served, there is a delay of at least seven days before it can be advertised. The petition must be advertised in The Gazette at least seven days before the court hearing. This "grace period" is crucial for a company. Once a bank sees the advertisement, it will almost certainly **freeze the company's bank account**. Banks do this to protect themselves, as a liquidator can later reclaim any payments made after the petition was served. This freezing of the bank account is often a fatal blow, but the seven-day delay provides a window of opportunity for directors to seek advice and prepare a response.The Process in Scotland In Scotland, the process is far more immediate and damaging. The minimum debt for a winding-up petition is £10,000. When the petition is lodged with the court, a "First Order" is immediately given, which authorizes both service and advertisement. Crucially, the petition is also "Walled" so pinned to the court's public notice board. Banks actively monitor these wallings. As soon as a bank spots a walled petition, it will immediately freeze the company's bank account, often before the directors are even aware of the action. This leaves the company with no access to funds to pay staff, suppliers, or legal advisors. This immediate freezing of funds can be a "knock out blow" that prevents the company from lodging a defense or proposing a Company Voluntary Arrangement (CVA), often leading directly to liquidation. There is no grace period for advertising as there is in England.Our Advice To mitigate this risk in Scotland, we strongly advise directors to lodge a "caveat" with both their local Sheriff court and the Court of Session. A caveat requires the court to notify the company if a winding-up petition is being pursued. This notification provides some lead time, allowing directors to prepare answers and a potential CVA proposal while the bank account is still operational. This small window of opportunity is vital for a company to have a fighting chance to continue to trade and seek a solution. A winding-up petition can be the death knell for any company, and in Scotland, the speed of the process makes acting quickly to lodge caveats and prepare a defense all the more critical.So if you feel under threat then DO NOT DELAY and talk to Eirlys Lloyd our expert advisor on these matters on 0131 242 0081 or 08009700539