Corporate Insolvency

For companies in financial difficulty

The threat of a winding up order against a company can be concerning, not only for the company but for the directors as well.

In this section, we explain:

• What happens when a company is served with a statutory demand by a creditor
• How a company may challenge a statutory demand
• What happens if a winding up petition is presented and how it might be challenged by a company
• The consequences of a winding up petition being presented against a company (for example, frozen bank accounts)
• What a Validation Order is and how to apply for one. It is commonly used to unfreeze a company’s bank account but there may be other transactions that need the Court’s permission in order to avoid it being held unlawful (and possibly at risk of being reversed).

The presentation of the winding up petition places immediate and automatic restrictions upon a company until the winding up hearing. A failure to comply with these can have serious consequences, and may result in a claim against directors personally. Information relating to the above can be found in these sections.

For directors facing investigative action

The consequences of a winding up order against a company can open a number of serious claims against directors of that company (and other parties), which can result in directors being held personally liable to account to the company for lost assets, facing fines, being held personally liable for company debts, or in more serious cases facing director disqualification orders or imprisonment.

In this section, you will find information regarding:

• Claims to recover overdrawn director’s loan accounts;
• ‘Phoenix Trading’ and the consequences of re-using a prohibited company name. We also explain how you can lawfully re-use the insolvent company’s name (which is usually purchased with the company’s ‘goodwill’) without personal liability;
• Misfeasance claims against directors, including who may bring such claims and how much such be defended;
• Antecedent transactions that are at risk of being challenged and/or overturned following the company being placed into insolvency; and
• For directors who are facing director disqualification proceedings or are being threat with being disqualified as a director

The winding up of a company will have an immediate impact upon directors, who will no longer have any control or power within the company. Instead, such control is vested in the Liquidator who will have various duties to the creditors of the company and also the Court as ‘office-holders’, including powers and duties to investigate the directors’ conduct. Information relating to these can be found throughout these sections on the site.

For creditors

Being owed money by a company can be both frustrating and worrying.

Here, we explain:

• What steps you can take to try and recover that debt, including a statutory demand where the debt is over £750;
• How to wind up a company, if the demand is ignored;
• What happens once a winding up order is made; and
• How we can help you

The purpose of a winding up order is for an appointed insolvency practitioner to take over and essentially collect in the company’s assets (including taking any necessary action against directors or other potential parties to increase the company’s assets), to sell these assets to generate a pool of money available to distribute amongst the creditors in accordance with the statutory hierarchy.

For more information, please contact our team of experts by emailing insolvency@bankruptcy-solicitors.com or call 020 8308 3610 today.