Dramatic reduction in the use of winding up petitions by creditors
Research carried out by Graywoods has revealed a dramatic decrease in the number of creditors using winding up petitions to enforce debts.
The latest official Government statistics have shown that 2,807 companies were wound up by the Court during 2017 as a result of a winding up petition, a fall of 50% since 2009. The number of ‘voluntary’ liquidations rose during the same period by 6.3%.
Commenting on the research, Deborah Lockwood of Graywoods said, “Over the past ten years there has been a fairly steady decline in the number of companies that are being wound up by their creditors. However, many companies are still affected by winding up petitions, with at least 5,111 being presented and advertised in the London Gazette last year. What we can’t be certain of how many petitions are presented but not advertised, as the debt is settled before the petition is heard by the Court.
“The message to directors of struggling companies is that there are a range of options available to them to enable their company to be turned around or rescued, even when a creditor has lost patience and has petitioned for the company to be wound up.
“The sooner that the directors take advice, the more options will be available and the more palatable those options will be.
We specialise in Company Voluntary Arrangements (CVAs), which can be proposed even after a winding up petition has been presented by a disgruntled creditor. If a CVA is accepted by creditors, usually on the basis that they will get a better return by the company continuing through the CVA rather than being wound up, the Court will dismiss the winding up petition and the company can continue to trade with a sustainable plan to deal with its historic debt.”
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