Bankruptcy and Winding Up Solicitors
A company can be wound up if it is proven that they have debts of a certain value which have gone unpaid over a specified period of time.
- Milton Keynes 01908 660966
- Northampton 01604 828282
Bankruptcy and Winding Up
A company can be wound up if it is proven that they have debts of a certain value which have gone unpaid over a specified period of time.
When a limited company is wound up, assets are sold in order to create funds which are then used to pay any outstanding liabilities, this is known as liquidation and once complete the company ceases to exist and may not continue trading.
In many instances the debts owed by companies in this position exceed the value of their assets and it may not be possible for all liabilities to be paid in full. In these instances there is an order in which the funds created by the liquidation are distributed. First the costs of the winding up process must be covered. After this, preference is given to certain types of creditors and our team can provide you with further details of how debts are prioritised in these circumstances.
Bankruptcy
Bankruptcy relates to individuals who in their personal or professional circumstances as a sole trader or partner have taken on debts which they are unable to pay. When an individual is declared bankrupt their assets are divided between any creditors and additional future earnings that are due to the individual may also be distributed in this way. Bankruptcy also comes with a series of restrictions which are applied to the individual and are designed to protect customers and creditors.
Petition for Winding Up/Bankruptcy
Before a company is wound up or an individual made bankrupt, a written demand for payment is made, which will give the debtor 21 days to settle the debt or to dispute it. The debt must be unsecured and the value must be more than £750-£5000. If payment isn’t made following this final warning, then it is possible to commence winding up or bankruptcy proceedings against the individual of company in question. Our team will arrange the necessary petition to the court and a hearing will be arranged in order to approve or dismiss the petition. If approved, then an Insolvency Practitioner or Official Receiver will conduct further investigation and carry out the process.
Frequently Asked Questions about Bankruptcy and Winding Up
Can you still trade if you are in liquidation?
No, when a company is in iquidation it can no longer legally trade.
Can creditors go after an LLC?
A limited company is a separate entity from the directors of the company and there for the individuals cannot be held personally liable for the debts of the company except where the director has acted fraudulently.
Can I wind up a company that owes me money?
If a company owes money, a winding up petition can be requested to help recover the monies through liquidating the company assets.
What is meant by winding up?
Winding up is the process of closing a business, liquidating its assets to pay debts and the company will cease trading and no longer exist
How long do winding up proceedings take?
On average it takes around 1-3 months to go through the winding up process and another 1-2 years before a company is liquidated.
What debts are not covered by bankruptcy?
Debts such as student loans, maintenance and child support costs, court fines, payments because of confiscation orders and debts due to personal injury or death are not covered by bankruptcy.
What do you lose if you declare bankruptcy?
All non-essential assets are used to cover the debts that you owe – this includes property, any excess income and non-essential possessions.
What happens if I declare bankruptcy?
If an individual is declared bankrupt all of their non-essential assets are seized and used to pay debts. The individual’s credit file will reflect their bankruptcy status.
Contact the Franklins Bankruptcy and Winding Up team
If you have any questions about bankruptcy and winding up, please don’t hesitate to contact our team of experts who are on hand and ready to help you.
