In England and Wales, What are Bankruptcy and Winding Up Proceedings

If you owe money to an individual or company, this party can submit a request to the Court to make you bankrupt or wind up your company. If the Court agrees, it can make you bankrupt or wind up the company in order to secure payment of the debt. Once you or your company are either stated bankrupt or wound up, you or your company are considered to be insolvent and your company may be described by others as being in liquidation.

If an individual is declared bankrupt, his or her assets are transferred to an official called the Trustee. The Trustee is appointed by the Court. The Trustee’s main responsibility is to sell your assets in order to pay off all your debts. Once bankruptcy is declared and the Trustee appointed, the Trustee will control all the debtor’s finances until all debts are paid off or until the period of bankruptcy ends, which can normally take two or three years.

When a company is wound up, it appoints a liquidator. The liquidator will manage the company’s business affairs instead of the normal directors. The goal of the liquidator is to use any of the company’s assets to pay off outstanding debts. Once all assets are sold off, the company is dissolved and no longer exists legally. It should be noted that if a company is liquidated and dissolved and if all debts are paid off, any remaining money left will go towards the shareholders.

In most cases bankruptcy or winding up procedures start when a debt is outstanding. It is up to you or your company to contact HMRC to try to work out an arrangement for repayment. However, if you are unable to do so or if you refuse to pay off your debt, bankruptcy or winding up procedures will commence.

For more information on this topic, please visit the following link:
http://www.hmrc.gov.uk/howtopay/1i.htm
How Can I Avoid Insolvency Proceedings

The main way to avoid insolvency proceedings is to make a payment now. You can send your payment to the following address:
Enforcement & Insolvency Service
Durrington Bridge House, Barrington Road,
Worthing, West Sussex BN12 4SE
You can also contact the office at the following number 01903 700222.

If you are unable to make a payment immediately, contact the office and negotiate a repayment plan that both you and the tax office can agree upon.

For more information about this topic, please visit the following link:
http://www.hmrc.gov.uk/howtopay/2i.htm
How will Bankruptcy Proceedings Begin?

Bankruptcy proceedings will begin when HMRC issues a Statutory Demand. This Statutory Demand will be served in person if at all possible. In this Statutory Demand, it will once again request payment. It will also include the claim in detail. It is extremely important to go over this demand and to study the claim in detail. This demand also includes information on who to contact in the case that you:
• Dispute the amount that the demand asks you or your company to pay
• It will include information if you would like to make an arrangement for settling your debt
• If you believe a mistake has been made or that you do not believe you owe anything to the office and would like to apply to the Court to set the Statutory Demand aside.

For more information regarding this topic, please visit the following link:
http://www.hmrc.gov.uk/howtopay/3i.htm
What Happens If I Do Not Make a Payment?

After 21 days have passed since the Statutory Demand was served, HMRC office will be able to file a Bankruptcy Petition in the Court. In most cases, this petition will also be served to you personally about 14 days before the date of the hearing in the Bankruptcy Court.

In this petition, you will find information telling you where and when the Bankruptcy hearing will take place. In addition, you will be given information on how to oppose the making of the Bankruptcy order. If you do not wish to oppose the order before hand, you can state your case at the Bankruptcy court to the Registrar which will decide matters. It should be noted that you do not need legal council in order to state your case before the Court, however it is recommended. You may want to consult with a Solicitor or Citizen’s Advice Bureau before stating your case.

It should be noted that any proposal of settlement before the and during the Bankruptcy Order will be considered.

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Source: http:///www.hmrc.gov.uk/howtopay/4i.htm