A Winding Up Petition (WUP) is a legal action taken by a creditor to liquidate a company due to unpaid debts.
It is typically a last resort after other recovery methods have failed.
Winding Up Petitions are a court procedure, and as such, must follow a strict process as detailed below:
1. Petition Filed:
The process often begins with a statutory demand. If the debt remains unpaid after 21 days, a creditor owed at least £750 – including HMRC– can apply to the court for a WUP.
2. Seven-Day Window:
Once the petition is served, the company has seven days to act. Options include paying the debt, negotiating a settlement (for example, a payment plan), or disputing the debt. This period is crucial to avoid
further legal and financial consequences.
3. Public Notice:
If unresolved, the petition is advertised in the The Gazette, alerting the public and other creditors. This step often results in immediate reputational and operational damage.
4. Bank Accounts Frozen:
After advertisement, banks typically freeze the company’s accounts to prevent asset dissipation or further harm to creditors.
5. Winding Up Order:
If the court grants the petition, a Winding Up Order is issued, placing the company into compulsory liquidation. An Official Receiver is appointed to handle the process, including selling assets and distributing proceeds to creditors.
Due to the severe implications, directors should seek advice urgently upon receiving a petition. As insolvency practitioners we are licensed to provide you with the right advice and expert guidance you need during these times, call Simply Corporate for immediate help and advice.
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