Received a winding up petition? Business under pressure but viable? Avoid Compulsory Liquidation at all costs. Get help & advice today!
Bridgestones has 17 years experience in helping companies like yours avoid Compulsory Liquidation wherever possible. If you've received a winding up petition but your company is financially viable, there could be options open to you to beat the petition and rescue the company. It is imperative to get prefessional help quickly.
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What is Compulsory Liquidation
Compulsory Liquidation is an insolvency procedure that occurs when an insolvent company is ordered to close by a court. This usually happens when creditors issue a ‘winding up petition’ due to your company failing to pay its debts.
The Compulsory Liquidation Process
If your company is facing pressure from creditors regarding unpaid debts, it is vitally important that you contact a licensed insolvency advisor straight away. The earlier that you act, the more options you may have available to you and the greater the chance that you will be able to save your company. If you leave the issue and do not take active steps, then the compulsory liquidation process could begin. At that point, there are limited procedures that can save your company from being closed down.
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The usual process for a Compulsory Liquidation is as follows:
Firstly, if your company has an unpaid debt of more than £750 with a creditor, that creditor can issue a Statutory Demand. This is a formal demand for payment of the debt. If the payment is not made within 21 days, the creditor has the right to apply to the court for a Winding Up Petition.
Winding up Petition
If an agreement is not reached to settle the debt, the court will issue a winding up petition against your company. At this stage, you really must act. You must speak to a licensed insolvency professional for advice and guidance. There may be a number of measures which can be taken to rescue the company from being forced to close.
The Judge will consider the evidence brought before the court to assess whether a Winding Up Order shall be made. If you have failed to act or if alternative insolvency proceedings cannot be put into place, it is more than likely that your company will be issued with a Winding Up Order. This is the point of no return. A Winding Up Order forces your company into Compulsory Liquidation.
Once the company has been put into Compulsory Liquidation, the court will usually appoint the Official Receiver as liquidator. The company liquidator will notify Companies House of their appointment, place an advertisement in the London Gazette, and send notices to creditors detailing how they will carry out the company liquidation. The liquidator will then sell off company assets in order to release funds to pay debts to creditors.
Closure of the company
Once all of the company's assets have been realised and the proceeds have been distributed amongst creditors, the liquidator will convene a final meeting of creditors and issue a final progress report. They will then file the report with Companies House and have the company formally removed from the Companies House register, bringing about the end of the company's existence.
How To Prevent Your Company From Going Through Compulsory Liquidation
If you wait until a Winding Up Petition is issued against your company, it can be much harder to initiate any company rescue procedures. If the Winding Up Petition becomes a Winding Up Order, then there is nothing that can be done to save your company from Compulsory Liquidation.
The only way to stop compulsory liquidation is to satisfy creditors at the earliest opportunity – either by paying the amount due, coming to an agreement on more manageable payment terms, or entering into a formal insolvency process. Some of these procedures are detailed below:
Company Voluntary Arrangement (CVA)
A Company Voluntary Arrangement (CVA) is a payment plan that can be negotiated by an insolvency practitioner between an insolvent company and its creditors. A CVA sets out new payment terms which allow the insolvent company to repay all or part of its debts via monthly payments over a period of time. A CVA allows an insolvent company to recover from its debts by working through to solvency, without being forced into Compulsory Liquidation. As your appointed insolvency advisor, we would look into your company finances to determine what your company can afford to pay back over a fair amount of time. We would then draft a proposal and negotiate with your creditors on your behalf to come to an agreement.
Company Administration is a company rescue procedure where we would work with the directors, with the aim of rescuing the business from insolvency and maximising the value from the business assets. One of the major benefits of Company Administration is that once a company is put into administration, all legal proceedings against the company are halted. This allows us time get the company back to solvency, or produce a better outcome for creditors, and thereby prevent Compulsory Liquidation.
Through our extensive range of trusted industry contacts, we can assess how your company could raise funds to pay creditors through financing and investment opportunities. This could be through invoice factoring, crowd funding, assets finance or private investment. We can assess your company’s situation and determine what the best options are for you. The funds raised can then be used to pay creditors and therefore avoid Compulsory Liquidation.
A pre-pack administration is an insolvency process that realises a better value for the company’s assets than if the company went into liquidation and closed down. A pre-pack administration usually helps to safeguard jobs and ongoing business for the future. The negotiations to obtain the best outcome for creditors take place before the administrator is appointed, and the sale takes place immediately after appointment. This minimises the disturbance to the business, maximises the return to creditors and safeguards jobs.
For more information and advice on any of these company rescue procedures and guidance on whether they would be suitable for your company, simply get in touch with us ASAP via telephone, email or online live chat. Remember, if your company is facing pressure from creditors, it is vital to act quickly; this will give you the best chance of rescuing your company and preventing Compulsory Liquidation.
Creditors' Voluntary Liquidation – the alternative liquidation method
If your company is insolvent, you are facing pressure from creditors, and there are no feasible company rescue procedures that will work for your company, then we may suggest that your company enters into Creditors’ Voluntary Liquidation.
Creditors’ Voluntary Liquidation is the process of voluntarily closing down your insolvent company. The advantage of choosing to close down your company, rather than having your company forced to close, is that it puts you in control of the situation.
Putting your company into Creditors’ Voluntary Liquidation reduces the likelihood of your directors being accused of wrongdoing, during the investigation carried out by the liquidator as part of any liquidation process. When you enter into a Creditors’ Voluntary Liquidation, you will have the help and guidance of an experienced insolvency practitioner of your choosing from the start.
So What Should You Do Next?
For more information and advice on Compulsory Liquidation and company rescue solutions, simply get in touch with us via telephone, email or online Live Chat. Insolvency issues won’t just go away, so it is important to take action before it is too late and your company is forced into Compulsory Liquidation. We can meet you at your office – wherever you are located - in complete confidentiality. We can assess your case and determine a best course of action to avoid Compulsory Liquidation.