Business Winding Up

Is Your Business Winding Up? What Are The Options?

The term business winding up is one which encompasses both a creditors voluntary liquidation and also a compulsory winding up.

The creditors voluntary liquidation is by far the most used corporate insolvency procedure in a business winding up. It is initiated by the directors, who advise the shareholders (in a small company usually the same people) that the company is insolvent, that there is no chance of saving the company and that it needs to be closed down.

The creditors at a meeting are advised of the financial state of the company and asked to vote to place it into liquidation. The creditors are allowed to question the directors at the meeting as to the reasons for the business winding up. Sometimes this can be distressing for a director especially when the creditors are persistent in their questioning but, more often than not, creditors do not even attend in person at the meeting and instead vote by proxy to liquidate the company.

We always advise directors who seek our advice to take steps to wind up their own businesses, rather than sit and wait for a creditor to do it, as it shows the liquidator that one is complying with the obligations of a director.

A compulsory liquidation is begun by petition of a creditor who is owed more than £750 and follows the service of a statutory demand. A petition is issued out of the local county court in which the registered office is situated, if it has bankruptcy jurisdiction. There are not many of these issued every year and, of those that are, these are usually started by the Inland Revenue. Creditors do not like to use them as they are expensive and would very rarely result in even the costs of the petition being recovered.

In very exceptional cases, taking this step may lead to payment of the debt due to the creditor being made, but if this is after advertisement of the petition it can cause major problems.

If you have been served with a statutory demand as a company and need advice on how to oppose it, or you have tax and NI issues, and are worried about action to be taken by the Inland Revenue, you need to make a call to one of our advisors, who will be able to assist.

However, if you need help with personal debt (rather than business related debt) go to our free debt management plan application form.

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We specialise in the following:

business debt factoring
invoice discounting
business bankruptcy
business finance
company bankruptcy
voluntary arrangement

pre pack administration

voluntary liquidation
business liquidation
wrongful trading
business insolvency
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business turnaround

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