The first step a creditor must do before presenting a winding up petition is carry out a search to check that no other petition has already been presented. This is because unless there are truly exceptional circumstances a second petition will not be allowed to be presented also – there would be confusion in the courts otherwise.
The procedure for then getting a winding up order is firstly to issue the petition.
The following must accompany the petition as delivered to the office of the court:
- Three copies of the Petition
Together with additional copies, if necessary, for any voluntary liquidator, administrator or supervisors of CVA - Payment of the Court’s fee
- A witness statement verifying that what is said in the petition is true
- A receipt for the deposit
- A stamped addressed envelope if the petition is posted to the court.
The court will endorse the petition with the date, time and place of the hearing.
What should the petition include?
- The full name and address of the petitioner
- As regards the debtor company, its name and registered number, its date of incorporation, its registered office address, its share capital, and its principal objects
- The grounds on which the petition is presented
- Details of the debt owed
- A statement that the debtor company is insolvent and unable to pay its debts or in the alternative that ‘in the circumstances it is just and equitable that the company be wound up under the provisions of IA 1986’
- A statement as to whether the EC Regulation on Insolvency Proceedings applies and if it does, whether the proceedings will be main, territorial or secondary proceedings
How should the petition be served? And timeframes…
- The petition must be served at the company’s current registered office. It may be handed to any person there acknowledging that they are a director, officer or employee of the company or other person (eg solicitor) authorised to accept service. If no-one is there to accept service, it can be left there in such a way that it is likely to come to someone’s attention, but a witness statement will need to signed by the person who left it explaining the circumstances and what they have done. If there is no registered office, then it should be served at the company’s main or last known business address.
- The petition must also be served on any voluntary liquidator, administrator or supervisor of a CVA.
- The petition must be served at least seven business days before it is advertised and (unless the court directs otherwise), it must be advertised in the Gazette not less than seven business days after it has been served on the company and not less than seven business days before the day fixed for the court hearing. That’s to say the petition must be served at least 14 business days before the hearing at which it is heard.
- Any creditor may give notice to the petitioning creditor (or their solicitors) that they intend to appear at the hearing of the petition.
- At least five business days before the hearing a certificate of compliance must be filed in court, witnessing the fact that all’s been done properly in terms of service.
What happens then?
The petitioning creditor can withdraw the petition, with the approval of the court, up to five business days before the hearing. Permission will not be given if the petition has been advertised or another creditor advised of their intention to support or oppose the petition. Where a creditor supports the petition, they may take over the control of the petition (ie be substituted) even if the petitioning creditors no longer wants to proceed, seeking a winding up order.
If the debtor company wants to fight the petition they must file their evidence to do so in court at least 5 business days before the hearing.
What happens at the court hearing?
At the hearing, the court has the following options:
- Dismiss the petition
- Adjourn the hearing conditionally or unconditionally
- Make an interim order
- Make a winding up order
- Make any other order it sees fit
If the court makes a winding up order, the Official Receiver who is attached to that court is automatically appointed liquidator of the company unless the winding up follows an administration or voluntary arrangement – in which case it is the incumbent Administrator or Supervisor who is normally appointed as liquidator.
If the winding up order is made, the winding up is deemed to have commenced on the date of presentation of the petition and not the making of the order. The exception to this is where the winding up order is made on an Administrator’s application, when the start of the liquidation is deemed to commence on the date the order is made.
It’s important to note that the court cannot refuse to make a winding up order simply because the company has no assets or all the assets are secured. That’s to say a lot of companies are wound up using this route to enable an investigation to be carried out to ascertain what’s happened to the assets.