When you are helping companies with debt, inevitably, not a week goes past without someone calling saying their company is being threatened with a winding up petition at the High Court for an unpaid invoice. Equally, we are often contacted by directors whose company is owed money and they simply cannot get paid for one reason or another. Again, the winding up question is raised “can I wind the company up if he doesn’t pay?”.
In a surprising number of cases inexperienced lawyers will instigate the winding up action against a company knowing it will bring maximum pressure to bear but are often taking a big gamble. A winding up petition is the forced and compulsory liquidation of a company when the company can no longer pay its debts or chooses not to. We have had several cases recently where directors have been in despair as they have clearly contested debts with creditors yet have still progressed to the High Court. In all the cases there was no legal proof that the debt was ‘real’ in as much as no statutory demand had been presented, or previous court action had proven the debt in law.
|Dealing with Business Debt|
The message is a clear one – if you are owed money then always prove the debt beforehand, either by the use of a statutory demand or a CCJ, for example. This proves that the debt is uncontested and you can pursue the winding up petition safely in the knowledge you have followed due processes.
Written by: Mike Smith