Money owed – Question & Answer

Question: I am owed €7,489.00 by a company that is refusing to pay me. Can I wind up the company to get my money?
You can certainly try but winding up a company is not an easy task.  It involves engaging the Court process to have a Liquidator appointed to wind up the debtor company. Any creditor of a company can petition the courts to wind up the debtor company but the practicalities of doing so must be seriously considered before going down this route. It is an expensive process involving many court applications and advertising costs as all creditors will need to be notified of your petition to wind up the company.
The debt must be over €1,270.00 to use this procedure but in reality a winding up petition is not appropriate unless there is a large debt owing and the debtor company has considerable assets. If a Court grants a petition to wind up a company (and the court has the ultimate discretion whether or not to do so), an Official Liquidator will be appointed. The Liquidator’s job is to realize the assets of the company to discharge the debts of creditors.
It is important to note that just because you obtain the winding up order does not grant you an automatic right to first pick of the proceeds. There is a pecking order as follows; the costs of the liquidator must be firstly paid, followed by payments to secured/preferential creditors. For example, claims by the Revenue Commissioners to PAYE and PRSI contributions already deducted from employee’s wages but not yet paid have preferential status. Finally unsecured creditors will receive the balance, if there is any! Furthermore, stamp duty must be paid on the proceeds of realization before the assets can be distributed. Unfortunately, in the majority of liquidations there are little or no funds left to satisfy the claims of unsecured creditors.
A debtor company should be carefully evaluated to ascertain if there are sufficient assets which can be realized to pay all of the above before making a decision to wind up a company. In your circumstances where the debt owing is only €7,489.00 and it is unlikely that you are a secured creditor, I believe a winding up order would only serve to benefit the other secured and preferential creditors.