Winding Up Notices
What is a winding up company notice?
When your company fails to pay its creditors, they might issue a statutory payment demand. A payment demand requires your company to pay its creditors within the agreed time period – if the demand is ignored, a winding up petition can be filed.
A winding up petition is a petition by one (or several) of your company’s creditors to the High Court. The petition seeks a winding up order against your company – an order that allows the court to liquidate your company to repay its creditors. During the winding up petition process, a winding up company notice is published in the Gazette – the official public record. This notice informs the public, and your company’s other creditors, to the fact that a winding up petition has been filed.
Will Your Company’s Winding Up Hearing Be Published?
Has your company been issued with a winding up petition? Failing to respond to a winding up petition has numerous consequences, including the chance of a winding up company notice being placed in the Gazette informing the public. Winding up notices aren’t published automatically, and it is the responsibility of the creditor filing the winding up petition to notify the Gazette. There are several rules and requirements for a notice to be published to the public record.
A winding up notice being published can have numerous negative effects for your company. These can include bank accounts being frozen, credit lined being closed and other creditors joining the process to liquidate your company. Winding up company notices can be blocked by acting quickly by way of injunction to restrain advertisement. They can also be prevented by reaching an agreement to repay your creditors, typically via a company voluntary arrangement (CVA).
How can you stop a winding up notice?
Upon receiving a winding up petition, your company has several options available to reach an agreement with its creditors. It also faces restrictions on the actions you’re able to take as company director:
- You cannot sell any of the company’s assets in order to raise funds to pay creditors – these transactions could be reversed by the High Court
- You cannot enter the company into creditors voluntary liquidation (CVL) or administration (ADM) unless the petition is disposed of
Despite these restrictions, your company has several options for responding to the petition. These include proposing a company voluntary arrangement (CVA) to pay your company’s creditors some or all of the sum they are owed. Your company can also enter into administration once the petition has been disposed of. In administration, your company may be able to enter into a CVA, provided it is agreed upon by the company’s administrator and its creditors. Finally, your company can take legal action to prevent the winding up petition from being publicised. If the winding up petition is abusive (for example, if the debt is not agreed upon) you may be able to file an injunction to stop the notice’s publication.