Winding up a company: How the process works
If a company is unable to pay its debts then it’s possible to apply for a winding up petition which could see a business placed in liquidation.
This will occur if the petition is successful and debts must be at least £750 for the process to be considered.
It is by no means a guarantee that any of the money owed will be returned, although a debt specialist or business recovery firm can provide help and advice.
Notifying businesses of intentions
In order to wind up a company there must be evidence that the person or persons involved are owed money by that particular business.
A certificate of personal service or substituted service to confirm that a request for payment was made is one such piece of evidence.
Alternatively, a statement from a bailiff showing that they couldn’t recover enough assets to pay the debt will also be suitable in cases where a court judgment was granted.
If a company’s debts amount to more than its assets, this may also be accepted as evidence by a court.
Applying for a winding up petition
In order to start the process of winding up a company, the right forms must be used although guidance on this would be available from insolvency practitioners.
Guidance is also available via Companies House, while any petition must be served to the company at its registered office.
A certificate of service is also required to confirm that this has been done and any paperwork is then sent on to any relevant liquidators, receivers or administrators if the firm is involved in one of the following situations:
- voluntary liquidation
- administrative receivership
- administrative order in place
- voluntary arrangement in place
Settling the case via a court hearing
If a petition is accepted then a court hearing will be set up and if that hearing is successful then a winding up order will be issued.
As a result a company will close and its assets will be sold to service debts. An official receiver will be placed in charge of the liquidation in order to oversee this process.
By Phil Smith