"There was a lot of other stressful issues going on in my life at the time of the bankruptcy and I have to say without Stuart’s advice and help I don’t think I would have gotten through it as well as I have. I cannot thank Oakdale enough. I would recommend them very highly."

BUSINESS INDIVIDUALS

Can a Winding Up Order be Challenged?

There are times when the directors of an insolvent company are left with no choice as to which insolvency procedure they use. If creditors have been ignored and matters have been left too long without action, a ceditor can seek to have your company wound up. In cases where business continuity is not the goal, and there is no cash or assets inside the company, a winding up order can be a good thing as it saves the directors having to raise money personally to close the company.

Often though, where the directors of an insolvent company want to continue trading, being wound up could be the worst-case scenario.

When a company has been wound up this way, the directors have a duty to co-operate with the Official Receiver at the local Insolvency Service office. It is their job to establish the following:

  • How did the company become insolvent?
  • Has the director(s) done anything untoward? e.g. selling assets at an undervalue, or paid family members instead of HMRC etc.
  • Whether there are any assets that can be sold for the benefit of the creditors?

The directors will be required to complete a very lengthy questionnaire for the official receiver. This will form the basis of the face-to-face interview which takes place after the answers to the questionnaire have been reviewed. The face-to-face interview typically takes around two to three hours but can take a lot longer and can be held over a number of days, depending on the size and complexity of the business.

Following the interview, the directors have to deliver all of the company’s accounts and records to the Official Receiver.

The Official Receiver will produce a report for the creditors outlining the reasons that the company failed and comment on the likelihood of the creditors receiving any of the due monies. This will only happen if there are assets to realise (turn into cash). If there are, then the official receiver will normally arrange for a licensed insolvency practitioner to take over his role as liquidator, and they will be the ones who deal with the assets.

If you are unfortunate enough to be in the position whereby your company is under threat from being wound up by a creditor, it is vital you seek advice as early as possible to help explore the alternative options available.

If it is too late and the company is already wound up or is going to be imminently, then you need help from a firm that understands this complicated procedure; one that can eliminate exposure in areas such as:

  • The company’s assets – if you have a new business that needs to acquire them
  • Personal guarantees that may have been given
  • Redundancy claims – making sure you receive exactly what is due to you
  • Co-operating with the Official Receiver – questionnaire, interview, books and records
  • Accusations of trading whilst insolvent