Home Legal opinion Winding Back the Clock?

Winding Back the Clock?

Many businesses are structured as incorporated bodies otherwise known as limited companies.

Sometimes companies move locations, with a few outstanding bills. Those bills are never seen by staff or directors and remain unpaid. More often than not companies move around without properly notifying all creditors (businesses or individual to whom money is owed) of their movements and worst still delaying or failing to update the registered office information at Companies’ House.

Creditors will chase up and send demands but often do get any response because the company is not at the old location anymore. In some cases the creditors serve a statutory demand if the amount of debt is over £750.00 and then apply for creditors winding up order after the demand has not been settled within 21 days from receipt.

Amit Sharma, acted in a recent matter when a company unknown to it had a winding up order made against it by the High Court. You can imagine the horror of the directors (who are also usually the shareholders) when they discovered that their  company assets were effectively frozen due to the order and they were unable to trade in anyway.

A winding up order can be cancelled in very limited circumstances if and only if;

1. The company or shareholder have acted promptly, usually within 7 normal days of the Winding up order in making the application or statement of request and

2. The company is fully solvent, i.e. that it can pay its debts as they fall due and

3. The company prior to any final hearing can settle all outstanding creditors and provide evidence as well as settle the creditors’ legal costs and

4. The company settle the official receivers costs and

5. There are compelling reasons for cancelling the order and no compelling reasons for not cancelling the order.

In these circumstances, the court will first will treat the winding up petition as brought back to life, then order rescission (cancellation) of the winding up order and then dismiss the original winding up petition at a later hearing. If you are a director or shareholder in a company that has had a winding up order made against it wrongly and you believe that the company is not insolvent you should seek urgent advice. Please note this information is not for advice purposes and all liability for reliance upon it is excluded.

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