A winding-up petition can be issued by the HRMC to enforce the company to close down by an unpaid creditor. When you receive the winding-up order, your bank accounts are frozen, so that you cannot run your business. In such a scenario, you should know what to do.
- Winding Up Order: If you are unable to pay off your debts, the court will issue a winding-up order. Action to sell off your assets and property will be undertaken. You have to attend the hearing if the petition is accepted. The court arranges the date of hearing and the petition becomes a winding-up order.
- Dealing with HMRC
There are various options available to rescue your company from closure and the sale can be reversed, even after you receive the HMRC winding-up order. The quicker you react after receiving the winding-up petition, the better it is. Until the hearing takes place, you can opt for Provisional Liquidation, by which you can put the control of your country into someone else.
- Defense Options Tips to Deal with HMRC
You have seven days to challenge the petition and stop the petition from being advertised in the Gazette and for the court hearing proceedings. Within seven days of receiving the petition, immediate and quick action has to be taken to rescue your company. You can make an informal agreement with your creditor or you can reimburse your creditor. There are various other options to deal with the HMRC and protect your company from the HMRC winding-up order. You can contact us to take the required action to save your company.
- Reimburse your Creditor: You can pay off your creditor or negotiate with them. Take steps immediately so that the winding-up petition is not advertised in the Gazette. This will give you time to pay off your creditor before your bank account and company assets are frozen. Once you pay off the debt, the creditor can withdraw his petition. You have to pay off your debts and the costs of the petition within seven days. However, this is not a feasible solution in the majority of cases.
- Enter into Voluntary Liquidation: You can place the company into the control of the creditor’s voluntary liquidation. It will give you time to prepare a strategy to address various issues such as personal guarantees, lease termination, etc.
- c. Company Voluntary Arrangement (CVA): You can arrange for time towards repayment through a formal agreement with HMRC. If there are more outstanding debts, you have to arrange for a CVA. You will gain time to repay your debts in installments when you receive the winding-up order. You can seek time for an adjournment of the petition, to get a CVA.
- Voluntary Liquidation: You can enter into voluntary liquidation. You should know the difference between compulsory liquidation and voluntary liquidation.
- Disagree with the Debt: You can apply to the court to dispute the debt. This will prevent the petition advertisement in the Gazette. Before the winding-up proceedings, if there is already a case related to the debt, this will apply. The court rulings stipulate that no pressure should be applied to the company. If the judge agrees to the evidence provided by you, the petition will be dismissed. It is called an abuse of court process and you will be awarded the costs. However, if the court does not agree with you, the company will have to be wound up.
- Protect your Company Accounts and Bank Statements: As a director, you can seek professional help to protect your company assets. Your management accounts should also be protected.
- Attend the Hearing: You have to attend the hearing which the court has arranged for if you are not able to take any action. It will lead to the winding up of the company. If you are not able to resolve the issue within seven days, it will become an order. As a director, you must confirm to legal proceedings. You have to respond to all information requests.
- Seek Professional Help: Most people do not know how to deal with the situation, nor the knowledge to deal with it. You can seek professional advice to buy some extra time to adjourn the petition. You can contact us and we will make the necessary arrangement and give you professional advice when you receive the winding-up order. The later you delay, the harder it is to work out a rescue plan. We need to bring a rescue strategy immediately to salvage your company. Directors are not well-equipped to handle the legal actions when they get into a financial mess. The overwhelming task makes directors think that they can do nothing in that situation. Awareness of the situation and seeking professional help is the best way to handle the financial crisis.
