This is a process when one of the company’s creditors decides to pursue their demand for payment via a winding up petition lodged at court. If their petition is successful, the business will be subject to a winding up order and will cease to trade.
Winding Up - What Happens Next?
When a company has gone through a winding up process it will no longer be able to trade and it will ultimately cease to exist. The Official Receiver is appointed to protect the assets of the company and undertake an investigation into the conduct of the directors and any shadow directors. Assets are realised by the Official Receiver or a subsequently appointed liquidator and a dividend paid to creditors if sufficient funds are realised.
How does a creditor issue a winding up petition?
If a company refuses or is unable to pay a creditor the money it owes to them then a demand for payment can be issued.
If the company fails to pay the debt or provide evidence that the debt is genuinely disputed a winding up petition can be issued.
On the commencement of liquidation proceedings there is a specific order of priority for the payment of claims:
- Secured Creditors
- Floating Charge Holders
- Preferential Creditors (includes employees wages)
- Unsecured Creditors (includes HMRC
- Outstanding Debt Interest
Before deciding on whether to issue a winding up petition it is advisable to consult an experienced legal professional.