We have been instructed by a landlord to present a winding up petition against its tenant who owes them a lot of money.

What exactly is a winding up petition?

In short, it is a method for enforcing payment of a debt. By presenting a winding up petition to the court you are effectively saying four things (1) the amount you are owed is more than £750.00 (2) the amount owed is undisputed (more on the undisputed part below) (3) the company which owes the debt is insolvent and unable to pay its debts as and when they fall due (4) the company should be put into liquidation. Or in other words, 'wound up'.

When to present a winding up petition

As mentioned already, not only is presenting a winding up petition a method for enforcing payment of a debt, it is also a heavy handed way of doing so. This method is often employed as a last resort (usually after making several demands). This is due to the fact that should the company which owes you money not pay, and the company is ordered to be wound up, then the company will be placed into liquidation. The chances at that point of you recovering your money in full will be drastically reduced.

You should also only present a winding up petition for an undisputed debt. The courts are keen to stress that this is not a method that should be used strategically to put pressure on a company or debt recovery, generally. Should the courts conclude that the debt is disputed and a winding up petition was inappropriate, then severe cost consequences often follow. Especially if the company you seek to wind up are legally represented. 

Other factors to bear in mind

A further factor to consider is that this is a costly procedure. The Court fee and Official Receiver's deposit alone is currently (March, 2016) £1,630.00. So you need to think carefully before presenting a petition as the costs of presenting a petition along with the possibility of liquidating the company which owes you money may be seen as spending good money after bad. That said, most companies we advise are at this stage because despite satisfying all the criteria above, the methods adopted prior to the presentation of the winding up petition have not secured the money owed.

Final thoughts

This is a very specialist area. Whether you would like to present a winding up petition or you have been presented with one, please do get in touch with us for specialist advice immediately. If not, then the following quote may ring too true..."If you think it is expensive going to a professional, you should try using an amateur." 

This article is not fully comprehensive legal advice. Advice will be based on specific facts. So please get in touch if you have any queries.