Winding up petitions issued by creditors against firms based in Central London increased by 39 per cent in October 2010 compared with 10.5 percent in the rest of the country, a new study has revealed.

The increase is simply a reflection of the government cutbacks and will probably continue throughout 2011.

It’s also evidence that creditors are no longer turning to the county court to recover debts; they’re going straight to winding up because it’s a more compelling method of collection, although it is an abuse of court and legal process.

Winding up petitions can be an effective debt collection tool, but only if they’re served correctly.

An appropriate example came last summer when I was contacted by a client who’d received a winding up petition from a firm of solicitors and was due in court in three weeks.

In order to comply with insolvency rules, proceedings for a winding up petition must be advertised in the London or Edinburgh Gazette at least 10 days before a hearing, which didn’t leave much time for the law firm to act.

I contacted the solicitors on behalf of the client to negotiate payment terms and asked them to discharge the debt and not advertise the petition in the paper on the grounds that once advertised, it cannot be withdrawn and the recipient’s bank accounts will be frozen leaving them without funds to pay the debt.

The law firm agreed, but in doing so broke insolvency rules (the winding up petition must be advertised).

As a result, if the client failed to make any payments before the hearing, the winding up petition was invalid and thus unenforceable; allowing them to pay the debt at a later date and continue trading.

Are you being served? If so, contact Insolvency and Law now for confidential advice and guidance. Call 0207 504 1300.

The post Winding Up Petitions Increase, But Are They Being Served Correctly? first appeared on Company Debt Recovery.

A Winding Up Petition (WUP) is the most serious action that can be taken against a company and usually is only issued if a creditor is determined to recover an undisputed debt or put the company out of business because the debtor company is believed to be insolvent.

The creditor will issue a statutory demand, which is a formal notice giving the debtor 21 days to settle the debt. If it remains unsatisfied after that time the creditor makes an application to the High Court or a Chancery Court (a division of the High Court) District Registry to wind the company up. 

If you receive a WUP, you must act quickly and should contact business expert Peter Murray on 020 7504 1300 immediately as there may still be time to discuss options such available to for the company.  This does not have to be the end of the road if you wish to carry on trading .

The post How Do You Issue a Winding Up Petition? first appeared on Company Debt Recovery.

Cardiff was taken over in May by Malaysian gambling and property tycoon Sri Vincent Tan Chee Yioun and is just one of several English football institutions to fall foul of HMRC recently.
 
This year alone, Portsmouth, Preston, Notts County and Southend have all faced winding up orders.
 
Settling your bill is a sure way to get a petition dismissed. However, there are several ways to avoid a winding up order – compulsory liquidation.
 
Winding up petitions can be withdrawn if:
 
i)                   The petitioner decides there is no value in winding the company up. Once the threat is delivered and the debtor doesn’t pay, the petitioner may be unwilling to front the full cost of winding up proceedings.
 
ii)                The petition has not been advertised in the Gazette
 
iii)              No other creditor has supported the petition
 
iv)              The debtor gives consent
 
 
They can be dismissed if:
 
i)                   The debt has been paid
 
ii)                  The debtor goes to court and proves the petition has no real basis; disputed debt
 
iii)                There is a technicality. A petition needs to be spot on when issued and served. If it’s not technically correct, a judge can grant leave the petitioner to and amend it.

The post How Are Winding Up Petitions Dismissed and Withdrawn? first appeared on Company Debt Recovery.