Is this alleged winding up petition valid?

I'll put more details in the body, posting here is a first for me!

Didn't find your answer?

In a nutshell, the woman we are talking about here is the most difficult woman I have ever dealt with. She referred us to an insolvency company who are threatening to issue a winding up petition over an invoice that was a whopping 6 days overdue. We have paid the invoice, but they are now trying to get us to pay legal costs (approx a third of the invoice value!!), which we are not paying, and saying they will proceed with the winding up petition over this. Would I be right in thinking that they can't issue a winding up petititon as the outstanding debt (i.e. the legal costs, not the paid invoice) is under £10k? 

Replies (16)

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By lesley.barnes
21st Dec 2021 17:04

Have you read this? www.gov.uk/wind-up-a-company-that-owes-you-money

The figure of £750 has increased to £10,000 as per the Government's temporary measures which will apply for the period 1 October 2021 to 31 March 2022.

There are usually lots of steps in place - small claims courts, payment reminders etc before a winding up petition is served.

It is more a legal question than an accountancy question but there is lots of information on the internet.

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By paul.benny
21st Dec 2021 17:35

I suspect they're trying to frighten you into paying when there is probably no legal obligation.

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A Putey FACA
By Arthur Putey
21st Dec 2021 17:40

Probably a wind up

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By gillybean04
21st Dec 2021 17:53

Is it actually legal costs they're trying to recover, or recovery costs?

As lesley indicates, you need legal advice rather than accounting. But before you do that, look out your contract and check if there's any provision made for late payment terms.

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Stepurhan
By stepurhan
21st Dec 2021 17:59

I would query the basis of the legal costs. Unless there was some contractual agreement that allows for them, I would say they are not reasonably claimable against you.

There is a rule of mitigation in law. This means a claimant should take reasonable steps to minimise their loss, and not take unreasonable steps to increase it. I suspect incurring legal fees at that level that quickly is likely to fall foul of the latter.

Best to get legal advice to confirm that applies if they look like pursuing it though. If you do, ask if being forced to do so (as a reasonable step to ensure you weren't paying something you didn't need to) gives rise to a potential counterclaim.

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By Justin Bryant
22nd Dec 2021 09:33

Legal costs for a winding up petition are at least around £5k and they would not spend that in the 1st place on this nonsense (and you need a statutory demand or undisputed debt for a winding-up petition and there is a minimum debt for that anyway as mentioned above). Assuming the debt/claim is disputed then that is an abuse of process, as would be them issuing a statuary demand and they would not get their legal costs and you could claim your legal costs against them.

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Replying to Justin Bryant:
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By Justin Bryant
22nd Dec 2021 15:57

Here's an abusive example (where fee was disputed): https://www.lawgazette.co.uk/news/firm-fails-to-wind-up-charity-over-all...

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Routemaster image
By tom123
22nd Dec 2021 09:44

Companies like TNT used to issue quasi legal looking letters (with lots of red ink).

After a while you got used to ignoring them.

And, if everyone got wound up after being six days overdue there would be no trade credit in this country.

What a hassle though..

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Lisa Thomas
By Lisa Thomas - Insolvency Practitioner
22nd Dec 2021 14:04

I'm not a solicitor so have to recommend you take legal advice.

For what it's worth in my opinion, you dispute the debt so they will have to get a CCJ first (issuing a statutory demand on a disputed debt is an abuse of process), before they can issue a winding up petition.

Plus then you have the issue of the delay on petitions until April.

It will cost thousands of pounds for the disputed creditor to do this.

Assuming interest applies, maybe consider paying 6 days worth of interest so there can be no dispute anything is owed in relation to this debt.

https://www.contractorcalculator.co.uk/late_payment_calculator.aspx

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Replying to Insolvency Practitioner:
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By Tax Dragon
22nd Dec 2021 14:33

More than 6 days. That was when the letter (whatever) arrived. OP doesn't say how much later they paid. Or what happened in between.

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By carnmores
22nd Dec 2021 15:03

just tell her your not paying any fees and wont be using her again. this happened to us once a phoographic agent then did much as you stated. we paid the invoice only and there was nothing further she could do about it , her hubris cost her money , nemesis

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Replying to carnmores:
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By Tax Dragon
22nd Dec 2021 15:25

IANAL. (There I go again.) Even if I were, I haven't done a comparative between the contract you had with the phoographic agent and the contract OP has/had with the woman in question, nor of the circumstances of each case, so I wouldn't know how relevant your story is to the OP's situation. We don't even know it's in the same jurisdiction, as eg DJKL would be quick to point out.

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Replying to Tax Dragon:
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By carnmores
22nd Dec 2021 15:37

Happy Christmas Dragon. and that applies to whatever jurisdiction that you think we may be in :-)

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Replying to carnmores:
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By Tax Dragon
22nd Dec 2021 15:49

You too Nick.

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Tornado
By Tornado
22nd Dec 2021 17:14

I would be inclined to write back and say that you feel their claim is invalid and you are considering charging them for your wasted time in dealing with this and you would be prepared to take them to the Small Claims Court if they did not pay any invoice you issued to them. Point out that small claims can be made online entirely from your desk these days and it it surprisingly easy to do.

Yes, it is a bit of a bluff (with some substance) but as they say, the best form of defence is attack.

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