What would you class as essential searches when conducting Commercial Property purchases? Would it be local authority searches, environmental, flooding and probably planning? What about Winding-Up Petitions?
If you’re not searching for Winding-Up Petitions at the start and the at the end of any commercial purchase, then you could be putting your client at risk.
Did you know that if a pending Winding-Up presented against the seller before the sale has completed later results in a Winding-Up order then the sale could be void and your client could end up as just another creditor?
Any purchaser would be well advised to look for any warning signs of financial difficulties when making a commercial purchase. Obvious signs are the seller accepting an offer well below the market value and pushing for a quick sale.
If you don’t conduct a Winding-Up Petition and post-completion the seller is issued with an order, their creditors have the right to dispute the purchase. Under the Insolvency Act 1986, an insolvent’s creditors are protected from being adversely affected by a sale of the seller’s property or any other disposition of their assets when proceedings have been issued.
If a property was purchased from a seller with a pending petition then the liquidator, or whoever has been appointed to deal with the seller’s assets, could seek to overturn the decision. The purchaser would then potentially go from being the owner to an unsecured creditor in the insolvency.
In this circumstance, the purchase only really has one option. They must appeal to the Court to validate or ratify the transaction. For the Court to do this there would need to evidence to support their claim that the transaction was made in good faith and was not connected to the insolvency. One of the ways to provide this evidence is by presenting the results of Winding-Up and insolvency searches that were conducted during the conveyancing process.
If there is evidence of a petition, it doesn’t necessarily mean the transaction will be void, but any court proceedings will most likely be costly. Revealing a pending petition gives the purchaser the options to withdraw before completion or proceed knowing the risk.
For commercial purchases, it’s advisable to conduct a Winding-Up search at the beginning so a client stop proceedings before they were to commit to any further costs. You should also check just before completion as circumstances can change quickly.
All petitions whether presented to either the Companies Court, a Chancery District Registry or the county court are recorded and logged in the Central Index of Winding-Up Petitions. To access this information, you can either call the Companies Court or you can use a service like ours, which allows you to order a search online.
Getting through to Companies Court can be a long and frustrating process. All calls are charged at a premium rate, often resulting in just a verbal yes or no at the end. With our solution, you simply place your order online, and you’re guaranteed results back with 15 minutes in the form of a PDF report which can be easily saved and used as evidence. We charge on a pay-as-you-go basis, with no minimum orders or monthly subscription – making it easy and convenient to find Winding-Up Petitions.