Company and Commercial

Insolvency Law

Frequently Asked Questions on Insolvency Law

Q We have just been served with a Petition for the compulsory winding-up of our company for a debt which we have always disputed. Can we defend the Petition?

A Contact us urgently. The date for the Petition Hearing will be endorsed on the back of the Petition. We need to prepare your evidence - a creditor will not be granted a winding-up Order simply to get his debt paid where it is genuinely disputed. If necessary, we can seek an Injunction to prevent the Petition being advertised. Act quickly - there is a lot to do in a short space of time, particularly as the Petition can be advertised after 2 weeks from being issued. Your Bank is then likely to freeze your bank accounts and creditors / suppliers are unlikely to extend further credit. Further trading then becomes very difficult.

Q Directors: My company has gone into liquidation, and I have heard from the Department of Trade and Industry that they intend to disqualify me as a Director for trading the company whilst insolvent. Is this serious? What do I do?

A Yes, it is serious - for you personally. Under the Company Directors Disqualification Act 1986, you can be disqualified for 2 to 15 years from being a Director and, perhaps more seriously from the point of view of your future employment, from taking part in the management of a company, directly or indirectly. This can effectively eliminate you from most senior management positions. You will have to disclose your disqualification. However, you can seek the Court's permission in certain circumstances, but the timing is difficult. It is a criminal offence to breach the Disqualification Order. Contact us urgently. We will try to reduce the proposed disqualification period or attempt to have the disqualification proceedings dropped. Under the Insolvency Act 2000, the matter can now be dealt with by giving an undertaking to the DTI rather than endure expensive Court proceedings, provided you are prepared to agree a period of disqualification.

Q Creditors: How can I find out if a company is in Liquidation?

A The Registrar of Companies in Cardiff keeps a record of all English registered companies and a search will reveal if the company is in Liquidation. (Telephone 0870 3333 636 or www.companieshouse.gov.uk). However, a Petition for the Compulsory Winding Up of a company is not recorded at Companies House until a Court has made the Winding Up Order. In these circumstances, ask us to search for you through the High Court of Justice and its District Registries to find out this important information. You could become a Supporting Creditor in the Winding Up proceedings.

Q Individuals: I have been served with a Bankruptcy Petition! If I am made bankrupt, will I lose my home?

A The Official Receiver (or your Trustee in Bankruptcy if one is appointed) may have to sell your house to pay your debts. In any event, your beneficial interest in your house (bearing in mind that your spouse or partner may also have an interest where, for instance, the house is owned jointly) passes to the Official Receiver or Trustee by operation of law immediately on your being made bankrupt. Contact us urgently. There may be steps we can take to protect your spouse and any children, and it may be possible for your interest in your house to be bought out by your spouse or even a third party.