Updated: 6th November 2020
If creditors are threatening to issue a winding up petition, or you've already been served one, the most important fact to remember is that your company is facing a very real threat of being put out of business within a matter of weeks. After being served a winding up petition you have one week to reasonably satisfy the petitioning creditor's demands. If you fail to take action within this 7-day period then the chances of rescuing the business begin to dwindle exponentially.
As the UK's largest and fastest-growing group of insolvency practitioners we have helped hundreds of companies stay in business after being issued a winding up petition. For free advice feel free to send us your questions online or call us on 0800 644 6080 for a free consultation. Alternatively, continue reading to learn more.
If you've recently received a copy of a winding up petition in the mail, the wisest preliminary measure you can take is to consult with an insolvency practitioner. Unless you have the money to repay the creditor the entire amount due in one payment then you'll probably need to utilise some type of formal negotiation. Without the assistance of a licensed professional it is highly unlikely that creditors will approve your proposals.
When you contact one of our insolvency practitioners you'll be given the opportunity to disclose the details of your case free of charge. We'll help you assess the situation and determine the most suitable course of action, which will probably include one of the following solutions:
Negotiating a CVA - First, we may discuss the option of negotiating a company voluntary arrangement (CVA) which, if approved, would allow you to revise repayment terms with multiple creditors and consolidate debt obligations into a centralised monthly contribution. A CVA in Northern Ireland could also let you terminate or revise onerous employee contracts at minimum cost. This is the most popular type of formal insolvency procedure used in the United Kingdom, primarily because it is easy to set up, cost-effective, and results in a mutually beneficial arrangement that gives companies the opportunity to recover from overwhelming debt. Click here to learn more about corporate voluntary arrangements in Northern Ireland.
Applying for Additional Financing – If you can't come up with the funds needed to repay creditors and you've already ruled out the option of applying for a loan due to poor credit problems, you may want to consider secured financing methods. You may be able to use some of the company's assets as collateral, or if one of your company's directors has decent personal credit then they could sign a personal guarantee as a security. If you're owed money on outstanding invoice payments and your clients are other companies that have a reliable payment history then invoice discounting and factoring may be an option to consider. Click here to learn more about the types of financing available to struggling companies.
Entering into Administration - If we feel that a CVA or additional funding will not provide an ideal solution fast enough then we may recommend entering into company administration in Northern Ireland, during which your company would be protected from aggressive legal action while the IP you've appointed as administrator works to satisfy creditor demands and reduce debts through a variety of means. If the company does not have a realistic chance of recovery but you're interested in preserving some of its assets before it is put out of business then you may be able to arrange to purchase the desired assets and transfer them to a different company using a process known as pre-pack administration.
Disputing the Petition Or Seeking an Adjournment - If the you feel that the debt delinquency has been misrepresented you may be able to successfully dispute the validity of the creditor's claims and convince the Court to dismiss the petition altogether. If it can be shown that the company simply needs more time to gather the funds needed to meet the creditor's payment demand then it may be possible to obtain an injunction to restrain advertisement, which would stop the petition from being advertised, thereby preventing your bank from freezing company bank accounts.
If you've recently been issued a winding up petition or your creditors are threatening to put your company into compulsory liquidation it is imperative that you act quickly to devise an optimal course of action. By contacting us for a free consultation (0800 644 6080) you'll be taking the first step in rescuing your company.