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Q: Can I put my company into administration with an outstanding winding-up petition?
A: Under the provisions of Schedule B1 of the Insolvency Act 1986 the following may appoint an administrator:
- A Company i.e. by resolution of its shareholders
- The directors of a Company
- The holder of a qualifying floating charge such as a bank or other lender
- The Court
However neither the Company nor its directors can appoint an administrator if a winding-up petition has been presented. If the Company or its directors feel that the purpose of administration can be achieved, and there is no creditor with a floating charge willing to appoint, they may make an application to the Court. This will involve solicitors and can be expensive and time consuming. The message therefore is that if a creditor has issued a statutory demand or has entered judgment, directors must seek advice as soon as possible to ensure that they retain control of the nature of any insolvency process.
Q: Does the new HMRC Business Payment Support Service mean I can reschedule my tax arrears?
A: From 24 November 2008 HM Revenue & Customs ("HMRC") introduced a new, dedicated Business Support Service ("BSS") designed to meet the needs of businesses affected by the current economic conditions who are worried about being able to meet tax, National Insurance, VAT or other payments owed to HMRC or anticipate that payments coming due will cause them problems. In order to qualify a business must be:
- in genuine difficulty
- unable to pay their tax on time
- likely to be able to pay if HMRC allow them more time
If you feel that you meet these criteria, ask your advisor to contact the BSS on your behalf with your tax reference number details of the tax that you are or will have trouble paying and basic details of your business's income and outgoings. The BSS will review your circumstances and discuss temporary options tailored to your business needs, such as arranging for you to make payments over a longer period. They will not charge additional late payment surcharges on payments included in the arrangement, although interest will continue to be payable on those taxes where it applies.
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.
