Effect of winding up on the company

Bank account Frozen

If a winding up petition is issued against a company, the effects are extremely serious.

Seven days after the petition is issued, it will be advertised in the London Gazette. This will alert the company's bank of the situation and within 1-2 days, they will freeze its bank accounts without further consultation with the company.

The effects of receiving a winding up petition are extremely serious. Call us now to discuss your options and how to save your company Call 0800 8 40 40 42

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Solutions to stop Winding Up

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Pre pack Administration

  • Legacy debt written off
  • Creditor action stopped

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Trading severely restricted

Once a winding up petition is advertised in the London Gazette, the winding up process has legally begun. At this time, the company should not continue to trade without permission of the court.

Under section 127(1) of the insolvency act 1986, any sale of property, transfer of shares or change to the company members is void unless so ordered by the court.

This means that staff cannot be paid, goods or work in progress cannot be sold and shares in the company cannot be traded.

Bank accounts are frozen because bank could be held liable for any payment made by the company after a winding up petition has been issued.

Allowing the company to trade using a Validation Order

Once a winding up petition has been advertised, the only way that a company can make a payment from its bank account or sell any goods without the risk of the transaction being overturned is to first apply for a validation order from the court.

If the court believes that making certain payments or selling goods or other company assets would be to the benefit of the creditors, it may grant a validation order to allow such transactions.

Because a validation order is required, a pre-pack administration cannot be used to rescue a company where a winding up petition has already been ordered.

The effects of receiving a winding up petition are extremely serious. Call us now to discuss your options and how to save your company




Winding Up Order and company closure

Once a winding up petition is issued, a date will be set for a winding up hearing that the High Court. At this hearing the court will decide whether the company should be closed or not.

If they believe that winding up is not justified, the directors must make their case at this hearing.

If the court believes that the closure of the company is justified, then a winding up order will be granted. The court will appoint a liquidator who will close the business.

The effects of receiving a winding up petition are extremely serious. Call us now to discuss your options and how to save your company