Archive for December, 2009

How To Stop a Winding Up Petition

There are a number of procedures to stopping a winding up petition once it has been issued. You can of course defend it if you feel you have ground to do so, but I will tell you from my personal experience that the winding up petitions are only issued as a last resort if all else has failed for the creditor who is trying to get their money from your company.

 You can of course pay the amount on the winding up petition that is one way of avoiding the petition.

 Other ways which we have used may a times as indicated in this short case study below.

 Case study of company “G” 

Company “G” a health & vitamins business online sales of £1.6m had run into financial difficulties with loss of orders and declining sale due the competition. They also lost 2 key staff members which did not help matters. With debts in access of £300,000 plus and increasing daily the bulk of the debt was Inland Revenue for PAYE and VAT. So it was only a question of time before some one set the ball rolling to wind the company up. HMRC were the first to issue a winding up petition jointly for PAYE & VAT the petition was for £176,000.00  

The directors after a week of trying to talk to HMRC , banks, solicitors and the company’s accountants they were no where near to the solution than they were before the winding up petition.  One good thing that did come out of their meetings with the company accountants was they were given our contact details to see what if anything we could do to help them.

 We were called in to see if we could see a way forward for the company and see what could be done about the winding up petition. After 2 days analysing the company’s books and records, we were able to identify a major asset that the company was unaware which it had. The asset was the customer database of over 500,000 customers who had made a purchase but only 10% were coming back for repeat orders. The company had been spending a fortune paying Google for pay per click for new customers and not doing anything with customers which they already had.

 Along with our legal team and an insolvency practitioner who was willing to work along side the company with a view of differing some of the Insolvency Practitioners fees and also we were happy to differ our fees subject to the proposal.

 We got the courts and the creditors to agree to place the company in to administration so that we could restructure the company and save jobs and return a higher dividend to the creditors via our route than the compulsory winding up procedure.

 A new company was set up to run the ongoing sales and also a new structure was placed. Priority was to churn as many of the company’s old customers rather than finding more new customers. We assisted in producing a 30 page catalogue with the fast moving lines and posted to the existing customer base within 3 months the company was able to see how much cheaper it was to sell to customers that had already purchased rather than finding new customers.

 Company “G” was liquidated after the administration had run its course and the creditors were paid out £0.45p in every pound owed.

 Further Support

 You should make use of this time to seek professional advice on the options open to you and your company, you can call the business helpline on 0800 24 0800 for free and confidential advice before it’s to late.

HM Revenue & Customs applied for winding-up petitions for Mr Ramsay’s Maze restaurant in Grosvenor Square, London, Plane Food at Heathrow Airport, The Narrow in Narrow Street, London, and the Restaurant Gordon Ramsay in Royal Hospital Road, London. continue

Most suppliers, investors and staff try to get their money by issuing a claim. But you can issue a winding up (company) petition or a bankruptcy (individual) petition instead.

Winding up and bankruptcy are also ways of enforcing a judgment after a claim has been won, in an effort to actually get your money. However, unpaid tax and wages take priority over other debts for any of the debtor’s available funds.

How winding up works

• It applies to a company rather than an individual.
• After the winding up the company ceases to exist.
• If the company is insolvent at the time, not all the creditors get paid in full.
• Rules apply and each creditor gets a percentage of what they are owed.

How bankruptcy works

• Bankruptcy applies to a person or a general partnership. If it is a general partnership, all the partners are made bankrupt.
• The assets are sold and the proceeds are paid to the unpaid creditors.
• Each creditor gets a percentage of what they are owed.

The threat and how it works

Often the mere threat of winding up or bankruptcy is very effective. But if the customer still refuses to pay you might consider the following steps:

1. A statutory demand, from a legal stationer or solicitor, or downloadable, can be prepared and issued by the creditor without necessarily using a solicitor.
2. The demand must be delivered to the customer, preferably by hand or by post, using the special delivery or registered mail services. In the case of a registered company, the statutory demand should be served at the registered office.
3. On receipt, the customer has a fixed number of days to pay or respond.
4. If they do not do so, you can issue a winding up (company) or bankruptcy (individual) petition.
5. If you follow all the procedures correctly, and the court finds in your favour, the customer will be wound up or made bankrupt.
6. But just because you issue the petition does not mean you get priority over whatever money becomes available.

The law assumes that a statutory demand merely paves the way for a petition. But it can be a very powerful debt collecting device in its own right, without the need to proceed to a petition. If the demand results in the issue of a petition (not an order for winding up), no matter how easily dismissed by the court, it can trigger a reaction from your customer’s other creditors. The petition may be publicised on the internet, which means that small businesses have an effective debt collection tool against customers of all sizes.

For more help if you have been issued with a winding up petition call our business helpline 0800 24 0800 and we will advise you of all your options open to you.

BASINGSTOKE Town FC has been issued with a winding-up petition – but chairman Rafi Razzak is assuring supporters and everyone involved with the club that there is nothing to worry about.

Her Majesty’s Revenue and Customs (HMRC) has applied for the petition against Basingstoke Town Limited, with a hearing due to take place in the High Court next Wednesday. continue

Cardiff City have announced Malaysian businessman Datuk Chan Tien Ghee has joined the club’s board and that he has already started to invest his money.

It comes on the day that the Bluebirds appeared before London’s High Court to face a winding-up order brought by Her Majesty’s Revenue & Customs. continue

The firm that runs Coventry Airport is the subject of a winding-up petition by the Inland Revenue, the BBC has learnt.

A petition to wind up West Midlands Airport Limited was recently put before the High Court. continue