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 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.