Help for Directors

All businesses face the occasional financial crisis but when they become a critical problem you need to know exactly where you stand. In our help for directors section, you will find specific information for answering your questions around if you are insolvent, what you need to do if you are and how it will affect you.

Creditors Voluntary Liquidation

What is known as Creditors Voluntary Liquidation is the process that most businesses must go through if they are insolvent. It can be a difficult time for everyone involved, so we have created this special section of our site to give you the important facts about CVLs in a clear and down to earth way so you can see where you stand.

Members Voluntary Liquidation

This is when your company is still solvent, but you (and your fellow directors) decide it is time to call it a day and retire or move on to the next stage of your lives.  With an MVL, you will release the assets and use these funds to pay off the creditors before returning the remaining funds to the shareholders.

Winding-up petitions

Winding-up petitions

Statutory Demands and Winding Up Petitions

Your creditors will naturally want to get back as much of the money owed to them as possible. That means they will usually try a variety of ways to collect some or all the outstanding amount before resorting to more serious measures. The best option is to try to come to some sort of agreement but if there is no deal possible and you cannot pay, creditors have various options when pursuing monies due to them.

One of the options is to serve a Statutory Demand.


The why and what of a statutory demand

A statutory demand is basically the last warning that unless you pay in full, or reach a payment agreement, the creditor will pursue the full payment via court action. You must not ignore a statutory demand. It is the creditor drawing a line in the sand and they will always follow through with further action.

There are several reasons why Creditors use a Statutory Demand. These are as follows:

Once a Statutory Demand has expired (you have 21 days to reply), the creditor can issue a winding-up petition. Whilst this has a cost, it is important to note that some creditors are credit insured and quite often it is a requirement of the insurance to show that the debtor, the company who owes them money, is unable to pay the sums due. A Winding Up Order is a clear way to show this so they can claim on the insurance.

We are also aware that some creditors also do this as a matter of policy. Commonly, this is in a particular trade or profession. The argument is that they want to show to all parties that they will pursue customers to the end in all cases. In many respects, we have seen that this policy works for the creditor as they will often be paid first over other creditors who are less aggressive.


What if you receive a winding-up petition?

It is vital that you act as soon as possible. The reason for this is that the creditor will advertise the petition. The advertisement will happen at some point between 7 business days after you received the petition and 7 business days before the Court hearing.

The reason this is important is that once the winding-up petition is advertised, the following can happen. 

Given the importance of the above, let us look at your options.

As noted above, some creditors will pursue winding-up orders to either claim on credit insurance or prove their point. In these circumstances, the insolvency option is often the only way forward as a payment plan may be very difficult to obtain.

The important thing is to consider the best options and take action. Winding-up orders are important and need dealing with immediately. We are happy to discuss this with you further and offer a free 20-minute initial call to discuss your problems.


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Find out more about our insolvency, liquidation or recovery service.  Learn how we can support you with clear, straightforward and empathetic guidance and support.

Call us on 0116 2967507 (Leicester), 01926 969000 (Warwick), 02476 0179639 (Coventry) or 01604 263179 (Northampton), or email us on