Company Winding up Help

Whenever a company goes into liquidation then a liquidator is appointed by the court for winding up all the affairs of that company. The main reason behind winding up is to convert the assts of the company in to cash to pay off the creditors.

Winding up of a company can take place when:

• The company is not able to pay off its debt.
• The company decides to wind up by court.
• It has not traded for more than year after its incorporation
• The company is at end of moratorium with no voluntary arrangement’s approval.

The company should try to pay back the debts at this time of winding up. Company can seek help for raising money and pay back the debt. If this doesn’t work then a solicitor can be appointed to deal with winding up petition to ensure fulfilment of legal requirements. Petition of winding up can be simply completed and presented in the court. According to the insolvency law, a statement of truth has to be submitted before the hearing of petition in the court for verification. Petition should be served on company’s registered office. Affidavit of petition’s service is also required to be filed. In case of petition withdrawals, more statement of truth is needed. Legal advice can also be taken as the procedure may differ in different cases.

The creditors, petitioner and the shareholders of the company have the right to be heard. On the basis of the hearing, court can make interim or winding up order, dismiss petition and can adjourn hearing.

Winding up can lead to the following consequences:

• Director of the company has to hand over company’s records and books to the official receiver. He also has to provide a complete detail of finances, creditors and assets of the company and explain reasons behind failure of the business.
• Company can be investigated to check whether company has made undervalue transactions, participated in illegal trade, or reused the name of the company. If any of this stand true then the director of the company can be suspended up to 15 years.
• If the director has carried out trade without the permission of the court then all the debts would convert into his personal liability and he will have to pay it from his personal assets.

Seeking legal advice at the time of winding up can make the process easier and simpler.