Winding Up Petitions And Football Teams

It has been well reported in the press and other media that Bolton Wanderers Football Club has been served with a Winding Up Petition by Her Majesty’s Revenue & Customs and more recently that Bury Football Club has also been served with a Winding Up Petition. 

Happily for Bury their problem appears to be a temporary one with the club issuing a statement that they have paid their debt and that the Petition will not be proceeding. Unfortunately Bolton’s problems appear to be a lot more serious but they have managed to get an adjournment of the Petition until 22nd February and let’s hope that they manage to resolve matters before then. 

But what exactly is a Winding Up Petition? 

A Winding Up Petition is generally used against a limited company which is in debt and is unable to pay their debts as they fall due.  It is a form of insolvency proceedings and if a Winding Up Order is made the company will cease to trade, a liquidator will be appointed and the assets of the company will be realised and if there are any funds left over once that process has taken place they are then distributed to creditors in accordance with insolvency legislation. 

Winding Up Petitions are widely used by Revenue & Customs as a way of recovering often huge sums of money because not only do they put the company under enormous pressure to pay the debt but also because failure to pay the debt will effectively put the company out of business and will prevent them from accruing any further debts. This appeals to Revenue & Customs because the inability to accrue further debt is almost certainly as important to them as collecting any money which is owed. 

There have been very many high profile Winding Up Petitions presented against football clubs over the years and they all attract a considerable amount of publicity, not least because one of the ways out for the football club is to enter into administration. However this results in the club being deducted points which can heap further misery onto the club and its fans and may ensure that relegation follows which is likely to increase the financial troubles of any club. 

However Winding Up Petitions are not reserved for the rich and famous nor are they only used by the tax man.  They are one of the weapons which can and should be considered by anyone who is owed a debt of a reasonably substantial sum.  They are certainly not the cheapest form of collecting debts and therefore should only be used when the size of the debt justifies it but it certainly doesn’t have to be a debt in the hundreds of thousands of pounds which is often the case for football clubs.

There is no doubt however that a debtor should never take lightly the issue of a Winding Up Petition and sometimes even the mere threat to do so can be an effective way of ensuring that the debt which is owed to you becomes a priority for the debtor.  If you are owed money and think that you would like to know more about whether a Winding Up Petition might be suitable for you then contact Fiona Gaskell at Clough & Willis.