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Q: What is the difference between a statutory demand and a winding-up petition, and how should I react to threats of action?
A: A statutory demand is served on a company by a creditor who is owed money. It should not be ignored; instead it should be passed to your advisors as soon as possible. If you ignore it for 21 days, the creditors will be entitled to present a winding-up petition to the Court. This will among other things result in your bank account being frozen.
Q: What is the difference between a compulsory liquidation and a creditors' voluntary liquidation?
A: A compulsory liquidation will result from a winding-up petition being presented to the Court and the Official Receiver will take control of the company. A creditors' voluntary liquidation happens when directors recognise a company's insolvency and call meetings of shareholders and creditors themselves.
Q: I have rent arrears and the landlord is threatening to distrain - what would you advise?
A: Speak to your landlord to see if he will take monthly payments as many are now doing. If he won't agree, speak your advisors as soon as possible as protection may be available to you to enable you to reorganise your affairs.
Q: My client company is concerned that it is insolvent and continuing to trade - what advice can you give him?
A: Unless the position for creditors is clearly improving as a result of continued trading the answer is "don't carry on". Directors can be made personally liable for debts incurred after they should have known that the company would have to go into insolvent liquidation. Speak to your advisors as soon as possible.
