Bankruptcy / Winding Up
This is the most expensive enforcement option but sometimes the most effective. The first step, in the case of an individual, is to serve a statutory demand on the debtor personally. If he does not pay, or dispute the debt, within 21 days a bankruptcy petition can be presented. The real expense starts at this stage.
In the case of a company you can proceed straight to the winding up petition based on the unsatisfied Judgment. You can also present a winding up petition based on an undisputed debt without obtaining judgment or serving a statutory demand. This is very quick and can be very effective indeed. Winding up Petitions presented against a company are advertised in the London Gazette. After advertising the Petition, other creditors may become involved. These may include HMRC or other creditors. If other creditors do become involved, and the debtor wants to settle this petition, it may have to satisfy them as well, otherwise they may wish to take over the Petition. The important point to realise is that if the debtor makes payment after the date of issue of the Petition and the creditor informs the court that it does not wish to continue with the Petition, another creditor may take over the Petition. If a winding up order were subsequently made on behalf of a supporting creditor, you the creditor would have to repay to the liquidator the money recovered. This is because the Winding up Order dates back to the date of presentation of the Petition. This does not apply to payments made by a third party e.g. a director. The court fee and receiver’s deposit for a bankruptcy petition are £970.00. The court fee and receiver’s deposit for a winding up petition are £1477.00. In view of the size of these disbursements, we may ask for these to be paid before we present the petition. However, if the debtor lives in London, much of the work has to be done by personal attendance at the court rather than by post. If the debtor is unco-operative and evades service at all points, this can cause the costs to rise beyond this. Such proceedings are the most costly option but can have great advantages with certain types of debtor.