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Threat To Wind Up

The threat or implied threat of a winding up petition

As far as companies are concerned there is no requirement to issue a statutory demand
prior to issuing a winding-up petition. Indeed, why give the debtor a further 21 days
to dispute the debt?

A very useful tactic is to write to the debtor advising that as the debt is undisputed
then unless it is discharged within, say, 3 days then an application will be made to the
court for the winding up of the debtor company. Such correspondence often results in
immediate action.

However, it is important to ensure that there is no dispute prior to issuing such a threat
and it must be recognised that the debtor can, in response to such threat, immediately
seek an injunction restraining presentation of a petition. The courts look dimly upon
parties who use insolvency process as a debt recovery tool and although this process
can produce excellent results, it is not without risks.

An alternative to an actual threat is to simply write a letter in which reference is made
to the fact that it is believed that the debt undisputed, the debtor is unable to pay its
debts as and when they fall due, and is therefore insolvent. Again such a letter can
create immediate results without actually threatening the issue of a petition. Expert
advice in this respect should always be taken.

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