This is the most serious action that can be taken against the company. Often the company has breached any trust the creditor had, payment deals have failed, cheques bounced and generally the directors have not kept their word to pay.
So the creditor reacts with the “nuclear” option. Of course sometimes its not as simple as that; in some cases we have seen creditors issue malicious petitions as a means of trying to settle disputes.
If a creditor decides to wind the company up, it is usually serious in its intent to recover the money it is owed and or put the company out of business.
Generally a winding up petition (WUP) costs say £800 to £1,800 to issue. This is because the petitioner has to put money on deposit with the court as well as paying legal fees to solicitors. So it is a serious step to take.
Process of issuing a petition: A creditor asks a solicitor to "wind the debtor company up" to recover debts, or to stop the company making its debts worse.
An application is made to the high court (PETITION) to ask the court to wind the company up. The process is a very legal and technical one but the main thing to remember is you must act as directors when this threat or petition is received. YOU MUST ACT quickly. Or face possible personal liability for the debts.
The Court will grant a hearing date to "hear" the petition. If the company does not respond, or if no defence is mounted, then its usually a matter of the judge issuing a WINDING UP ORDER.
