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A business might suddenly find itself in financial trouble for a variety of reasons, such as the loss of a key client; or the company struggles may have been dragging on for some time and, as a director, you’ve tried to ride it out for a turnaround in cash-flow which unfortunately isn’t materialising. Whatever financial situation you’re in, a winding-up petition in Scotland requires immediate action and suggests that the company is insolvent.
Creditors who issue a company with a winding-up order are not mincing their words; they mean business. A winding-up threat is different; this can be used purely as leverage to encourage the debtor to pay the creditor, but a petition itself means the creditor is fed up of not being paid and wants to see the debtor company brought to a closure.
If you’ve been issued a winding-up order, Real Business Rescue are well-positioned to advise. We are vastly experienced in the rescue and restructuring of businesses of all sizes in a wide variety of sectors.
An overdue creditor can petition to wind your company up if:
The courts might also order the winding-up of your company if petitioned by:
Once the petition has been lodged, it is a legal requirement for the company’s potential liquidation to be publicised in the Edinburgh Gazette for the benefit of other creditors – though it is not guaranteed they would see it.
If the winding-up petition is successful, a director within the firm would need to send off the Form 4.2 (Scot) – in addition to a copy of the winding-up petition – to the Registrar of Companies for Scotland and AIB. This must be sent immediately so that the company's public record can be updated – again for the benefit of creditors and anyone who may be interested in doing business with the company.
Once the winding up order is made, an acting liquidator (licensed insolvency practitioner) would be appointed to carry out the necessary duties of realising assets of the business to repay creditors. This process must begin with four weeks of the liquidator being appointed, and he/she would also be charged with investigating the company's affairs to understand why it has ended up in such financial hardship – such as scrutinising the conduct of directors. He/she will also call a meeting of creditors to bring them up to speed with the debtor’s situation and would need the meeting to declare whether they are appointed the official liquidator to take the case forward. If the liquidator is not appointed at this stage, the court appoints a liquidator.
Going forward, the liquidator would be required to send a statement of receipts and payments throughout the initial 12 months of the liquidation process and then every six months until the company is officially wound-up and there are no other assets to realise.
Upon the completion of this process, the Registrar of Companies for Scotland will register the company’s liquidation for all to see - and publicise this again in the Edinburgh Gazette. Unless the court finds any other reason not to, the company will then be finally dissolved after another three months which is the final curtain for the firm.
It doesn’t necessarily have to be this way if your company can still prove to be a viable business with strong potential to be profitable once again. In this scenario, you would have other options available to you which our experience insolvency practitioners can discuss over the phone or in person. But time, in these sensitive circumstances, is truly of the essence – the more time you allow us to intervene, the greater chance of finding a positive outcome for your company.
Real Business Rescue’s highly experienced team can advise on all matters relating to winding-up petitions, distraint notices and any creditor issues relating to company insolvency in Scotland. For further assistance, contact your local Real Business Rescue office – whether that be Aberdeen, Dundee, Edinburgh and Glasgow – and we can arrange a free consultation at your nearest office or at a time and place convenient to you. Alternatively you can dial our director hotline on 0800 644 6080 for immediate advice.
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