Don’t panic – you have some options

A Winding Up Petition (WUP) is a legal notice brought before a court by a creditor/s and is one of the most serious threats any business can face. 

If a company owes £750 or more and hasn’t made a repayment towards it in over 21 days, the creditor can issue a petition in court. 

Essentially, the application is asking the court to liquidate the company as they believe the business is insolvent and cannot repay its debts.

If the petition is approved, the courts will then notify you of the petition hearing by writing to the registered address of the company. 

The petition will contain an endorsed hearing date. The recipient then has seven days to respond before it will be publicly advertised in The London Gazette. 

If there’s no response, a winding up order will be issued at this hearing to place the company into liquidation. 

The assets of the business will then be disposed of and proceeds shared amongst creditors. 

It’s important to note that a WUP is a final resort and that before they try to petition the court, creditors will send numerous communications to the business requesting payment.

What does this mean?

Once a winding up petition has been advertised in the London Gazette, the company can face a series of negative consequences prior to being closed down including:

  • Frozen bank accounts – meaning that it’s practically impossible to conduct business as usual
  • Reputational damage – creditors, competitors, friends and staff will be aware of the issues the company is facing
  • Potential staffing problems – staff might consider that their careers are better served by leaving and getting a position elsewhere
  • Additional creditors attaching themselves to the petition – the “me too!” effect, other creditors will fear being left behind in any scenario and will look to join the petition to make sure they will benefit
  • Potential lease terminations – under some lease agreements, these can be triggered automatically by landlords in the event of an insolvency process.

While this situation is ongoing, directors still have to carry out their duties to creditors and the business. 

This means that once a winding up petition is issued, then they’re legally obliged not to allow the company’s assets to be diminished. 

If any of the following events occur then directors could find themselves held personally liable and could have to repay creditors from their own finances.

These include:

  • Repaying certain creditors over others – this is called making preferential payments and goes against the idea of treating all creditors equally.
  • Paying yourself
  • Selling company assets

What are your options?

There are three potential strategies that directors can pursue to avert a winding up petition – assuming they do not have the funds to pay the debt that caused the petition to be brought. 

Negotiation and Time To Pay

HMRC issues about 60% of all winding up petitions so the chances are that your business may owe them money through VAT, PAYE or corporation tax arrears. 

If you’re able to service HMRC debts but not clear them immediately, it may be possible to come to a formal agreement with them on a Time to Pay (TTP) arrangement. 

Directors or business owners, with the help of an insolvency practitioner, will propose an instalment repayment plan that spreads the arrears into repayments over a pre-agreed and manageable timescale that if agreed by HMRC and stuck to, will clear the debt with no additional interest added to the amount.

If this is not manageable then the company could look at a Company Voluntary Arrangement (CVA). 

This is not mutually exclusive to HMRC debts and will see all debts combined and after a proportion is written off as a statement of goodwill, regular payments made over a period of five years usually to clear them. 


An adjournment may be a suitable option as it would allow an insolvency practitioner to determine if your business is suitable for an administration if the court agrees. 

By entering administration, all creditor actions are automatically frozen including the winding up petition.

However in order for this to go ahead, a full hearing is required to justify why this is the best cause of action, which can be a costly procedure.

Place the company into voluntary liquidation

If it’s unlikely that your company will be able to raise the money to repay the debt then the only other remaining option would be to close the business down through a Creditors Voluntary Liquidation (CVL). 

A CVL is a formal legal insolvency process that has to be carried out by a licensed insolvency practitioner with the decision being made by the shareholders or directors of the company rather than having a liquidation forced on them – which is a different process called compulsory liquidation. 

One of the main benefits of a CVL is that all company debt, including bounce back loans, that is not personally guaranteed by directors is written off.

The insolvency practitioner then has additional time to work through all necessary tasks involved including dealing with any redundancies, settling any personal guarantees and directors loans and any other outstanding issues such as lease terminations. 

If you’ve received a winding up petition it’s important not to avoid it but understand that there are still options available to you – but only if you act quickly.

We offer a free initial consultation with one of our team of advisors available whenever it’s most convenient for you by telephone or virtual meeting. 

All you have to do is get in touch.