Who Can Do It?

It is important to understand that the winding up procedure is there for the protection of creditors.

Accordingly, if a petition is issued against a debtor company and a winding up order is made, the estate of the debtor company is distributed to all its creditors.

If there are secure creditors (eg, banks, factors), then they will get the first distribution of the estate (pro rata, depending on the value of their claims). Typically in such situations, there will be nothing left for the unsecured creditors.

However, you can frequently capitalise on the powerful effect of a winding up petition in the knowledge that, upon receipt of a petition, the debtor (if it has the wherewithal) will try to pay off the petition debt. Indeed, it is often beneficial in such cases for your debt to be for only a few thousand pounds, as there is more likelihood of the debtor being able to find the funds to repay you.