The Best of The World Wide Web

Receiving a winding up petition has to affect your business’ ongoing trading ability as its bank account is likely to be frozen.

A winding up petition can be issued on behalf of a creditor if they want to try and force a company to close. If the company does not persuade the court hearing otherwise, it will be ordered to be wound up.

All winding up petitions will be advertised in the London Gazette. All banking institutions monitor London Gazette advertisements. Once they identify that one of their clients has had a winding up petition issued against them, they will immediately freeze the company’s bank account. The bank takes this action to avoid being held personally responsible for any business transactions which could now be deemed void because the winding up process has started.

– All further transactions stopped –

This will prevent you from paying any money into the account or making any payment from it. This means that the business will have difficulty collecting cash which is due to be paid by its customers and will not be able to pay key expenses such as staff wages. The company will be virtually stopped in its tracks.

Generally, the only way that the bank will allow any transaction to take place is if it is specifically agreed by the court with a validation order. A court is extremely unlikely to grant a validation order simply to pay staff wages to retain them. It would generally only grant one if paying staff would result in work being completed that would increase the value of the company assets.

– Defending the winding up action –

If the directors of the company wish to argue against the company being wound up, they will have to present their position at the winding up hearing in the High Court. It is clearly sensible to have legal representation at the court. However, because there is no access to the company’s bank, the directors will have to fund this process themselves.

If the company is in financial difficulty particularly with corporate debt, winding up action will also be stopped by the implementation of a company voluntary arrangement (CVA). If a CVA is agreed, all further legal action including winding up proceedings against the business must cease. However, it takes a number of weeks to successfully implement a CVA so directors must act quickly if this solution is to have any chance of success.

A winding up petition will have a dramatic impact on a company’s ability to trade because it will result in its bank account being frozen. If you have a company debt problem or if you have been threatened with winding up and particularly if you have already received a winding up petition, you must get advice and act quickly if you want to save the business.

Get practical info about internet marketing online – read this page. The time has come when proper information is really only one click of your mouse, use this chance.