Typical situations
- A supplier has served a statutory demand.
- A winding-up petition has been threatened or presented.
- County Court judgments are accumulating and insurance or credit accounts are at risk.
- A key supplier has stopped shipping or has placed the account on stop.
Enforcement has a timetable
A statutory demand is a formal step. If it is not dealt with, it can lead towards a winding-up petition. A petition, once advertised, can freeze bank accounts and make continued trading extremely difficult.
The right response depends on whether the debt is disputed, whether it can be paid or compromised, and whether the company is still viable. Hoping the creditor will wait is not a strategy.
Negotiation still has a place
Many creditor issues can still be resolved commercially: a payment plan, a part-payment, a return of goods, or a wider restructuring discussion that includes the rest of the board's options.
That conversation is more effective when it is based on a cash-flow that the directors believe, and when it is had before a petition is advertised. After that point, the range of options narrows quickly.
Do not deal with one creditor in isolation
Paying the loudest creditor from remaining cash can leave HMRC, employees or critical suppliers in a worse position and can create problems for directors if the company later enters a formal process.
Turnwell helps boards look at the full picture, including HMRC debt, cash flow and director duties. Construction businesses facing main contractor insolvency or supplier stoppages should also read our construction creditor pressure page.
Common questions
What should directors do after a statutory demand?
Establish whether the debt is due, whether it can be paid or disputed, and how much time remains. A statutory demand should be treated as a board issue, not as correspondence to be left with bookkeeping.
Can a winding-up petition be stopped?
Sometimes, if the debt is paid, secured, disputed on genuine grounds, or if another process is the better route. The window is short. Directors should get advice as soon as a petition is threatened or presented. See our guide for directors.
Related services
HMRC debt
Address VAT, PAYE and corporation tax arrears, including Time to Pay and the risk of HMRC enforcement.
Administration
Understand when administration, including a pre-pack sale, may protect value and when it is not the right process.
Company Voluntary Arrangements
Understand when a CVA can restructure unsecured debt and when another route is more realistic.
Director support
Get a clear view of director duties, personal guarantees, loan accounts and the personal implications of the company's position.
Related insights
What to do if your company receives a winding-up petition
Practical steps for UK company directors after a winding-up petition is threatened or presented, including the effect on bank accounts and the options that may remain.
Personal guarantees when a business is under pressure
What UK directors should understand about personal guarantees if their company is facing cash pressure, restructuring or insolvency.
