This is generally where a creditor presents a petition to the court, via a solicitor, for a winding up order which will result in the Compulsory Liquidation of the company. This potentially is the worst thing that can happen to a director and their company. Most likely the bank would freeze the company bank account; this will not be opened until the petition is dismissed. At the hearing of the petition at court, if the director does not obtain an adjournment the company will be wound up and the Official Receiver will be appointed liquidator upon the making of the winding up order. The company will have to cease trading, and the Official Receiver will look into the trading affairs of the company. This can lead to director disqualification. Therefore, it is much better to avoid this if at all possible and take action sooner rather than later.
Preventing this from happening is not only efficient but much less costly as once a company bank account is frozen the only way to open it is through a Validation Order, this will only be for nominated transactions such as wages, and only if the account is in funds. Furthermore, the only way to bring a company back to life once wound up is through a Rescission, which rescinds the winding up order. This allows you the time to put an alternative way forward such as a Company Voluntary Arrangement to the creditors of the company. A Validation Order or a Rescission of the winding up order can be very costly.
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