A winding up petition can be an option if your business is owed money and you don’t want to go through the process of a obtaining a county court judgement. Choosing this option however is not without some potential pitfalls and there can be times where resorting to a winding up petition may not achieve anything.
Once a winding up order has been issued the result will be the appointment of a liquidator and closure of the business. This is why a winding up order is generally the last resort when you wish to recover debts.
The advantages of a winding up order are that you can wrap things up fairly quickly compared to having to go to court. It will also be far more cost effective if it works and achieves your aim of recovering the amount owed. Sometimes the threat of a winding up order will make the difference between the debtor paying and not paying.
There are also plenty of disadvantages to keep in mind one is that if the business in question makes a counter claim or disputes the sum owed the petition could be dismissed. This would end with you potentially picking up the costs and gaining nothing.
The debtors bank accounts could subsequently be frozen if other creditors hear about the petition. This would make it more difficult to recover the debt and wipe out any potential savings of going down this route.
If you are unsure about winding up orders and need advice contact us today.