Winding up applications and going to court
If you do not meet payment deadlines and cannot achieve a compromise agreement or payment extension, your suppliers or creditors might take legal steps to obtain payment, and if they genuinely believe you cannot pay, they might initiate winding up proceedings against you. This is a very serious threat and should be dealt with immediately, as it can lead to your business being put into liquidation.
If you may not be able to pay invoices on time or stick to any agreed instalment plan, let the relevant creditors know as soon as possible and seek to agree a compromise. If you do not take such steps, you may have more difficulties in the long-run.
If you have not paid a supplier due to faulty goods or sub-standard services or there is a genuine reason choosing not to settle a debt, as opposed to not being able to afford to pay, then you can respond to any statutroy demand and resist a winding up application. Ensure that you respond without delay, setting out your argument in writing, including evidence backing up your case. Make sure you have quick access to all evidence that might help stave off legal threats and give you some breathing space.
If you have a registered business address which is different to your actual trading address, ensure that you have a method of being notified of any mail, as legal documents will be sent to this registered address.
We recommend that if a creditor initiates winding up your company (or threatens to do so), you should consider the above carefully and take legal advice about what action to take.