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Winding Up Petition

 / 6 ways to deal with a winding-up petition against your company

6 ways to deal with a winding-up 
petition against your company

Once a winding-up petition has been issued against your company, there are tight
timescales within which you need to act to avoid your company being wound up.
We discuss the process and effects of winding-up petitions in detail on other
pages, but to avoid adverse consequences such as restrictions on trade, frozen
bank accounts, reputational loss, staffing issues, or lease terminations, we outline
6 ways to respond to a winding-up petition here.


What are my options if a winding up petition is issued against my company?

In this post, we talk about the various options available should a winding-up petition ever be issued against your company

  • Repay the debt:
    The process can be stopped if you can pay all the debts owed to the petitioner within seven days, including costs. Some helpful pointers: if you settle the debt, the petition must be withdrawn from the courts by the creditor before it gets to the hearing date.  If it isn’t, you will still have to attend the hearing and provide formal evidence to the court that the debt has been settled.  Verbal agreements won’t constitute formal evidence of the debt being settled, however, so you’ll need to be properly prepared if it does go to hearing.  It’s worth knowing that if the debt is paid before the petition is heard in court, but it does get advertised in the London Gazette, and another creditor has grounds for issuing a petition against your company, they can adopt or take-over the petition, even though the original debt has been settled.  It’s called a ‘change of carriage’ and can have major cash-flow implications.  It means you’ll be subject to proceedings concerning a new debt regardless of the one that you have paid.
  • Make an informal agreement:
    If you can pay the debt, but not immediately, it may be possible to come to an informal agreement with the creditor. Be aware though, that the winding-up process will cost your creditor in the region of £1450 – £4500 to initiate.  It’s therefore not something that they do lightly.  In most cases, a creditor will expect full payment quickly and you to pay their costs on top.  This means that payment terms can sometimes be difficult to agree outside of formal processes within this restricted timeframe.  Learn more about informal agreements.
  • Request an adjournment:
    The most popular grounds for an adjournment are: 1) to allow time for repayment in full via 3rd party funds or an asset sale and 2) to allow time to put a CVA in place.
  • Make a formal agreement with the creditor using a Company Voluntary Arrangement (CVA):
    Although it is sometimes possible to have a CVA agreed prior to a winding-up hearing, usually an adjournment of the petition is sought to give time for a CVA to be properly prepared and agreed.  See our pages on CVAs to see how this could work for you.
  • Place the company into voluntary liquidation:
    Voluntary liquidation allows you time to implement a full strategy to deal with various liquidation ramifications, such as personal guarantees, redundancies, and lease terminations.  See our guide ‘Voluntary liquidation Vs compulsory liquidation’ for more information.
  • Dispute the debt:
    If you disagree with the debt, i.e. that you owe the money, you can apply to the courts for an injunction against the petition, and to prevent it from being advertised in the London Gazette.  This is relevant to cases where there is a debt already in dispute prior to winding-up proceedings being initiated.  The courts have made it clear in their rulings that winding-up proceedings should not be used as a tool by creditors to apply pressure to a company to force it to pay a debt that is legitimately in dispute.  If you have a valid, or bona fide dispute with your creditor that you owe the money, you can apply to the courts for an injunction against the petition.  This is in effect a legal allegation against the creditor known as ‘abuse of court process’.  If any of the details of the debt are inaccurate, it is your responsibility to inform both the creditor that has petitioned the court and the court of any errors.  If having disputed the debt, the judge agrees with your evidence, you will be awarded costs, and the petition dismissed.  If the court agrees with the petitioner, your company will be wound up.


A note on costs of issuing a winding-up petition against a business

As mentioned above, winding-up is a relatively costly process. If you need to stop the process once the petition has been accepted by the court, you will be liable for those costs on top of the debt you owe to your creditor. This is nearly always several thousand pounds. If the petition does go to a hearing, you may also wish to instruct a solicitor or barrister to represent you in court, unless you are comfortable representing yourself.

Final thoughts

Whilst a winding-up petition against a business can certainly mean the end of some companies, it doesn’t necessarily have to. Every business is different, and whilst the options above will give you an idea of common approaches or strategies for dealing with a petition, the best thing that we can do is look at your particular situation with you.
If you have any questions, or would like to talk this through with one of our business rescue experts, use our booking system to set an appointment for a meeting or contact one of our expert advisors directly.

Business Rescue Expert is part of Robson Scott Associates Limited, a limited company registered in England and Wales No. 05331812, a leading independent insolvency practice, specialising in business rescue advice. The company holds professional indemnity insurance and complies with the EU Services Directive. Christopher Horner (IP no 16150) is licenced by the Insolvency Practitioners Association


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