Adjourn or stop a winding up petition
In order to stop a winding up petition taking effect once it has been issued then you need to act quickly to save your business! The court, which has the power to grant the winding up order, also has the power to grant an adjournment of the hearing at which the petition is presented. An adjournment may be granted if the court can be persuaded that the company needs more time to come up with the money or that the amount of the debt is disputed. It may be that the company can come up with all the money owed at a later date. For example, the sale of a valuable asset currently on the market but not having the money immediately available. However, if the debt is in dispute, and this can be proven, then the court has the power to dismiss the application.
Due to Coronavirus there is a moratorium on issuing winding up petitions until 30th September 2021 but it is unlikely to be extended any further. Legislation is due to be put in place that will mean that petitions cannot be lodged for debts of less than £10k until March 2022.
Warning: case law has indicated that the service of a winding up petition might make it harder to trade. All transactions will be voided if the company goes into liquidation which will mean that suppliers and advisors will not be willing to continue to support the company as a subsequent liquidator will demand all monies back. See this page for more details which will be updated as the situation changes. In essence, seek advice the moment your company receives threats of a winding up petition.
Reasons for Adjournment
It should be borne in mind that if the court is to adjourn the hearing they will need a good reason. As such, you will need a barrister to argue the case, backed up with documentary evidence. We have a number of people we can recommend who will can help you so please ask for details. A first adjournment can cost just c.£400 if your evidence is produced quickly and clearly.
If the company is unlikely to be able to pay off the whole debt then the company may get the petition adjourned and withdrawn if the directors propose a company voluntary arrangement (CVA). We have on numerous occasions had winding up petitions withdrawn after presenting a draft CVA to the court. However, in order for this to be successful we do need time to prepare the draft so it is always pays to act in time. Please read our case studies on how we have defeated winding up petitions by proposing CVAs.
One way to stop a winding up petition (WUP) being issued is to serve a notice of intention to appoint an administrator. Once this is notice has been sent to the court a moratorium is created over the company preventing any creditor from starting any legal action, such as a WUP, or continuing any existing legal action against the company without express permission from the court. The directors can file such a notice and so can the floating charge holder. This can be done very quickly once the insolvency practitioners have agreed to act and a lawyer has been instructed. The process is a bit more expensive but is usually only done as a last resort. The insolvency practitioners and the directors will usually seek a sale of the business in this time or a further injection of capital.
Do not delay and call us on 08009700539 or out of hours you can call on 07974 086779
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Worried about poor cashflow? Feel you have got into a bit of a mess? Covid-19?, How to pay wages on pay day? For reassuring advice on a range of issues download our free Ultimate Guide For Worried Directors today. Or just call us on 0800 9700539
Please note that the guide includes updates due to Covid-19 For instance there have been some changes to insolvency legislation that limits creditors actions. A new 20 day moratorium for distressed businesses has also been introduced.