Aston Villa face a winding up petition issued by HMRC for unpaid tax. If you’re a business owner the one thing you don’t want to receive is a winding up petition because as soon as your bank finds out about the petition the company bank account will usually be frozen.
This means that even if you have money to pay the petition debt you might not be able to get access to it leaving you in grave danger of going into compulsory liquidation.
So what do you do as a director? How do you react to this threat to your business?
The first thing to do is to make sure that you deal with any demands that you receive from creditors for payment particularly when the demand says that non payment will result in a winding up petition being issued. A creditor can issue a winding up petition after demanding payment and the letter of demand may only give a few days for payment to be made. Do not ignore these demands!
There is a common misconception that a creditor has to serve a statutory demand and wait 21 days for payment. A creditor can serve a statutory demand and wait 21 days for you to pay but does not have to do so. An aggressive creditor can, and usually will, just send a letter demanding payment and give a few days for payment to be made before issuing a winding up petition.
If you can pay then you can do so - if you cannot pay then you can speak to the creditor and agree repayment terms. If this doesn’t work then you need urgent from an insolvency specialist – even if it is impossible to avoid an insolvency process going into liquidation as a result of a winding up petition will almost always be the worst option for the company and the creditors as well as the directors.
If you have failed to respond to the demand and a petition has been issued then it is still not too late to retrieve the position but you really do need to take urgent action. The bank will not usually find out about a winding up petition until it is advertised and you have 7 working days after the petition has been served before this can happen.
Payment immediately after receiving the petition could sort out the problem but if you cannot do this then again urgent advice from an insolvency specialist should be taken.
Of course taking advice before creditors are banging on the door is the very best option as there may be steps that can be taken to improve your cashflow that mean that you avoid the position in the first place.
It looks as though the owners of Aston Villa are trying to raise funds or sell their interest in the club. If they are not able to raise the money to pay the unpaid tax then this will probably result in them going into administration because if they are forced into liquidation then they would lose their right to compete in the English Football League.
If you need advice then the TP Insolvency team would be happy to speak to you without obligation to let you know how we can assist.