When a winding-up petition can be presented
- AuthorChristopher Buck
A recent article, reported in the Northampton Chronicle and Echo, has covered the current attempts of Northampton Borough Council to delay the winding-up petition hearing it is facing so as to allow time for attempts to rescue the Club to continue.
A hearing is to be held to consider the matter, with the Club to be placed into Liquidation as early as 16th November 2015. Discussions have been had between the Borough Council and Her Majesty’s Revenue and Customs (HMRC), with the result of HMRC confirming that they will not look to adjourn or delay such actions. It will therefore be down to the Judge at the hearing to consider any opposition to the Liquidation and request for adjournment.
The Council has stated that it will do all it can to prevent the Club going into Liquidation and has also been advised by the Football League that only in the case of the Club being placed in Administration would there be deduction efforts regarding the team’s points. At present, there will be no points deducted from following the presentation of the winding-up petition.
There are also current considerations regarding a consortium with Oxford United Football Club. With a view to Oxford United obtaining the controlling interest of Northampton Town. Therefore, there are currently a number of possible outcomes regarding a possible consortium and also following the result of the Club’s Petition for Administration, which is expected to be heard by the Court by the end of the month. But when should the presentation of a winding-up petition be considered?
A winding-up petition is presented to the Court at the start of the winding up process. Namely, the petitioner is beginning proceedings so as to have the company involved placed into a Compulsory Liquidation. The consequences of a winding-up petition being presented against a company may be very serious; they may be with respect to the following:
- Dispositions of company property, if dated after the petition, are potentially void should the company be wound up by the Court.
- The commercial reputation of the company may be substantially damaged.
- Whilst the petition is in place, the company may find it more difficult to obtain credit.
- There will also be costs to consider regarding the legal action of dealing with the winding-up petition; both potentially in terms of legal advice and instructing the attendance of solicitors or counsel for the hearing.
The circumstances in which winding-up petitions should be considered are outlined in section 122 of the Insolvency Act 1986. The statute confirms that a company may be wound-up where:
- A special resolution has resolved that the Company should be entered into Compulsory Liquidation.
- The Public Company’s trading certificate, which is required under section 761 of the Companies Act 2006 (requirement as to minimum share capital), has not been issued and more than a year has elapsed since the Company was registered as a public company on its original incorporation.
- The company satisfies the meaning of an old public company as set out in Schedule 3 of the Companies Act 2006 (Consequential Amendments, Transitional Provisions and Savings) Order 2009.
- From a year of incorporation, the company has failed to commence business, or its business has been suspended for the period of a whole year. • The company is unable to pay its debts.
- It is found to be just and equitable by the Court for the company to be wound-up.
A company may also be wound-up where it is not insolvent. This would be the case where, for example, it would be in the public interest to have a company wound-up. Also, it may be that following a dispute between shareholders of the company, a winding-up petition by one of the shareholders may be on just and equitable grounds. This is recognised in section 122(1)(g) of the Insolvency Act 1986.
A company may oppose a winding-up petition put to it, so long as it complies with Rule 4.18 of the Insolvency Rules 1986 which stipulates that the company must file its evidence regarding its opposition at least 5 business days before the hearing. In practice, should the company not file its evidence prior to the hearing, but does indicate that it wants to oppose the petition, the Court may provide directions in accordance with the company now filing evidence regarding its opposition and also perhaps regarding the petitioning creditor’s reply.
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