Liquidation can be either a compulsory liquidation or voluntary liquidation.
Creditors winding up petition – An application is made to the court by one or more creditors of the company stating that the company owes £750 or more and they cannot pay.
If a creditor’s winding up petition is issued against your business, then you need to act fast as a successful application to the court could result in the petition being advertised. If the petition is advertised this could have incredibly damaging results for your business, as suppliers will know that the company is in trouble and the company bank may take steps to freeze the company account so you should seek legal advice immediately.
If you believe your company may become subject to a winding up petition and you would like to have a confidential discussion with a member of our team as to the implications of this, please make a free enquiry, and we will call you back at a time that is suitable for you or you can contact us directly on 01908 414990.
When Altion Law Assisted And Stopped The Company Collapse
Preventing HMRC Winding Up A Company Over Unpaid Tax
Altion Law was instructed by a Ltd Company which had been placed into a potential liquidation following Insolvency proceedings issued by HMRC for unpaid tax. HMRC had alleged that the company had deliberately avoided tax and defaulted on payments. HMRC had issued a winding up petition based on these allegations, which had led to the company bank accounts being immediately frozen.
Previous lawyers and accountants had advised the client that there were no prospects of contesting the insolvency action and that the company should be liquidated. The Director wished to fight for his company and approached Altion Law for a specialist opinion. Altion Law considered the facts of the matter and advised the company on options and represented in court to oppose and contest the wind up action, on the basis that HMRC had made some errors and false allegations.
A successful interim application was also made to obtain an immediate Validation Order so that the company could continue trade, whilst the wind up petition was heavily contested, and then settled before the main court hearing.
Altion Laws involvement and action resulted in the petition being dismissed and permitted the company to continue operating successfully again.
If the debt is disputed this should be raised with the creditor immediately setting out why the debt is disputed in full. Winding up proceedings are not the appropriate way to deal with a disputed debt and the courts do not take favourably to parties that attempt to wind up a company over a genuinely disputed debt. Where the debt is disputed the application should be withdrawn and the matter dealt with as a dispute instead.
If the debt is not disputed and the company can pay, arrangements should be made with the creditor as soon as possible to pay any outstanding debt which is due. The creditor’s application to the court should then be withdrawn.
Be aware that there are very tight timelines in insolvency, so you should seek legal advice immediately to understand your options.
If the creditor refuses to withdraw the petition in circumstances where the sum should not be paid, the company should consider making an application to strike out the petition and /or to prevent the petition from being advertised depending upon the circumstances.
If the petition is struck out by the court, then you are usually in a position to recover your costs. If the petition is not struck, then the matter will continue to a full hearing, at so you will need to look at taking steps to defend the petition if appropriate.
Have You Received A Winding Up Petition From HMRC?
If you have received winding up petition from HMRC with the intention to close your business then you need to act quickly and seek advice from us. We have many years of experience in speaking and dealing with HMRC so that we can take preventive measures or help your company to respond or discuss a Time to Pay arrangement.
We suggest that you seek legal advice as to whether you have any grounds to defend the winding up petition and act quickly so that you can respond to the proceedings. It is possible that the debt is not due, the debt is disputed, may have a cross-claim or procedure not been adhered to.
As a creditor, HMRC can petition the court to put a company into liquidation or to make an individual bankrupt to settle tax debts. This is permitted even where an assessment is under appeal and awaiting a tax tribunal hearing, where collection of tax is not postponed.
Voluntary liquidation is where the company is voluntarily put into liquidation, allowing the company to be wound up by agreement.
Members Voluntary Liquidation
The members of a company are able to take steps voluntarily place the company into liquidation. The directors of the company must be able to make a statutory declaration that the company is solvent, and that the company is able to pay its debts in full within a specified period not exceeding 12 months form commencement of winding up.
Creditors Of Voluntary Liquidation
If the company is insolvency however, the creditors may voluntarily appoint a liquidator who will then sell the assets of the insolvent company, with all proceeds being distributed to the company’s creditors. At the end of the liquidation, the company is then dissolved.
A company may go in to a creditors voluntary liquidation, or CVL, after the company directors realise that its liabilities exceed its assets or it cannot pay its debts as they fall due and so the company cannot carry on its business.
If you believe your company may become subject to a liquidation or you are considering issuing a winding up petition against another company, if and you would like to have a confidential discussion with a member of our team as to the implications of this, please make a free enquiry, or email us on firstname.lastname@example.org and we will call you back at a time that is suitable for you or you can contact us directly on 01908 414990.