Article by Laura Walshe of The Business Debt Advisor
Bolton Wanderers FC is no stranger to financial difficulty, having faced several winding up petitions for unpaid taxes within the last 18 months.
But the club survived another hearing in the High Court yesterday, after it was granted an additional five weeks to settle their debts or risk being placed into compulsory liquidation.
The financially stricken club has an unpaid tax bill of £1.2m and requested a second adjournment of the petition, which was presented by HM Revenue and Customs (HMRC).
Barrister Hillary Stonefrost told the Court that the club needed time to complete a share sale, and on hearing her arguments the petition was adjourned to 8 May 2019.
Future of the club?
Although fans will be grateful for this lifeline, the future of the club is by no means safe. Players have gone on strike for the second time this year after the club failed to pay wages for March.
In addition, the clubs next two Championship games are in doubt. If the games go ahead they will be played behind closed doors due to concerns over public safety after the stadium’s Safety Advisory Group said that it “was not prepared to put the public at risk”.
The multi-agency panel, which includes Greater Manchester Police, Greater Manchester Fire and Rescue Service, Bolton Council, North West Ambulance Service and St John Ambulance, added: “We recognise that Bolton Wanderers is at the heart of our community and this is a deeply regrettable situation.
“Safety and security remain our primary concern and while we recognise that spectators may be disappointed, we are not prepared to put the public at risk.”
What is Compulsory Liquidation?
Compulsory liquidation – commonly referred to as ‘compulsory winding-up’ – is the process of winding up an insolvent company through the courts.
The procedure is usually initiated by a creditor of the company when all other attempts to recover the amount due have failed.
Any creditor that is owed more than £750 can initiate the process but it is common for HMRC to present petitions in final attempts to recover unpaid taxes and VAT.
At the start of the process, a petition is presented to the Court for the company to be wound-up and then a date will be set to hear the petition.
A copy of the petition must then be served on the company and advertised at least 7 days before the hearing.
At the hearing the Court can make a winding up order, or if the petition is defended then it could be adjourned (an extension of time) or dismissed altogether.
What are the consequences of winding up order?
As soon as an order is made, the Official Receiver becomes the liquidator of the company.
The company must stop trading and all staff will be made redundant with immediate effect. The directors’ powers cease and control of the company and the sale of its assets vests in the liquidator.
It is important for Directors to be aware that, although the company is in liquidation, your duties as a director do not end. You may be required to assist the official receiver in the disposal of assets and will usually be asked to attend the Official Receiver’s for interview.
You will also be asked to:
- Provide information on the company’s assets and liabilities
- Provide information on any specific matters of relevance
- Hand over all company books and records in your possession
What to do if your company is facing a winding up petition?
The most important thing is to seek professional advice.
Depending on your company’s individual circumstances it might be possible to:
- Reach an agreement to pay the debt owed to the petitioning creditor
- Propose that the company enters Company Voluntary Arrangement
- Seek an order that the company enter into Administration
If none of the above options are suitable, it is possible for directors to suggest that the company enters into voluntary liquidation, as an alternative to compulsory liquidation.
If your company is facing a petition, or you have any concerns about the viability of your business please fill out our Contact Form and we will be in touch. Alternatively, please call us on 0800 781 0990.
Our team has extensive experience and can arrange an initial consultation at no cost, usually on the same day.