A winding up petition can be issued against a company which owes an undisputed debt of over £750. A Bankruptcy Petition can be issued against an individual owing more than £5,000.
The first step to commence Insolvency Proceedings is to issue a Late Payment Demand, we can often achieve this with just three days’ notice. In the majorty of matters, receipt of the Late Payment Demand is enough to make a debtor pay a debt without issuing proceedings. However, if payment is not received within the time provided, a Winding Up Petition can be issued. The Winding up Petition is then pursued through to final hearing, with the debtor’s bank account being frozen in the process.
If the debtor company is able to provide evidence to prove the debt is genuinely disputed, the Court may not allow the petition to proceed. This may result in you being liable to pay the debtors’ costs and care is required to consider and discuss with us any potential disputes at the outset of instructions.
A similar process can be pursued against individuals or partnerships through the Bankruptcy process for debts over £5,000. However, the creditor must first serve a 21-day demand and the debtor can apply to set aside the demand if the matter is subject of a substantial dispute.
Both of the above procedures should only be used in matters where no substantial dispute exists. Using the procedures in the knowledge that the debt is substantially disputed can result in you having to pay the debtors legal costs. We will advise you as to the suitability of the Insolvency process and thus lessen any risk.