This is an insolvency procedure that applies to companies (and partnerships) and is started by a Court Order – a winding-up order.
A winding-up petition is filed at Court, normally by a creditor stating that the company owes a sum of money that is overdue. A winding-up order can still be made even if the company has no assets or disputes the amount claimed.
Any disputes over debts should be resolved with the creditor(s) before a winding-up order is made because the effects of the order are severe.
If a director does not attend the hearing of a winding up petition, an order may be made even if the debt is disputed.
Once an order has been made, the Official Receiver (an officer of the court) will contact the director(s) of the company and arrange a meeting. It is very important that the director(s) fully co-operate with the Official Receiver throughout the process.
The assets of the company are sold, and any proceeds are distributed to the creditors of the company.
If you have been advised by a creditor that they will issue a winding-up order against you, seek advice straight away as there may be an alternative. Contact one of our team for free confidential advice.