Reviewed: 18th May 2016
A creditor’s petition is often the final step in a series of attempts to collect a debt. Filing a petition can be a costly process for the creditor, and demonstrates their determination to recover what is owed.
For this reason, it’s crucial to seek professional advice as soon as possible. You need help to decide on your next step, and to make sure that you protect not only the company, but also your own personal level of liability.
In most cases, the creditor must issue a 21-day statutory demand for payment prior to their application for winding-up. If this demand goes unheeded and the money remains unpaid, it becomes proof that the debt exists and allows the court to take further action.
If a County Court Judgement already exists against you, the creditor doesn’t need to issue a 21-day demand. They can file a petition for your liquidation straight away, and once it has been publicly advertised, events will move very quickly.
Your ability to trade will be affected if other creditors become aware of what is happening. They could instigate legal proceedings individually, or form a group to take action against you. Once the bank knows of the winding up petition, your accounts will be frozen, making day-to-day business no longer possible.
It is advisable to seek the help of an insolvency expert as soon as a statutory demand is received. If you’re now at the stage where a creditor has made a winding up petition, however, you still have a short period of time in which to take preventative action.
If the court issues a winding up order, business assets will be sold and your company liquidated. A liquidator takes over control of the business, and sends a report to the Secretary of State on the conduct of all directors leading up to insolvency.
If you need advice on what to do in this instance, or any general guidance about how to deal with creditors, Real Business Rescue offers a free same-day consultation and can discuss your needs in confidence.
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