Step-by-step: A winding up petition
Stage 1. Filing the petition in court
The petitioning creditor or their legal advisors file the winding-up petition in court. They pay the winding up petition fee and deposit at the same time. You won’t be officially informed of this until Stage 3.
Stage 2. The court agrees on a hearing date
Timeline: approximately 2 weeks after Stage 1
If the petition is accepted by the court. The court sets the hearing date and time, writing this into the petition before returning it to the petitioning creditors. The hearing date is usually set 4-8 weeks from when the court completes the details.
Stage 3. The creditor serves the petition
Timeline: approximately 1 week after Stage 2
The winding-up petition is served on your company either at its registered address, or by hand to an officer of the company, giving you the details including the outstanding debt and the time and date of the hearing.
Stage 4. The winding-up petition is advertised
Timeline: approximately 2 weeks prior to the hearing date
A public advert is placed in the London Gazette giving the hearing details.
Stage 5. Stakeholders may take action
Timeline: between the London Gazette advert date and the hearing date
Once the advert is placed, your bank is likely to freeze your bank account, and other creditors can apply to attach their debt to the petition. This means that in order to avoid winding-up, you’ll need to deal with their debt as well.
Stage 6. The winding-up petition hearing
Timeline: approximately 4-8 weeks from the court accepting the petition
The court will consider creditors submissions and either dismiss the petition, adjourn the hearing to a later date or make a winding up order to place the company into compulsory liquidation.
The effects of a winding-up petition
Once the petition has been advertised in the London Gazette, your company is exposed to:
- Frozen bank accounts
- Reputational damage
- Potential staffing problems
- Additional creditors attaching themselves to the petition
- Potential lease terminations – under some lease agreements, these can be triggered automatically
Once a winding up petition is issued, you’re legally obliged not to allow the company’s assets to be diminished. If any of the following happens you could be held personally liable:
- Repaying creditors – preferential payments
- Paying yourself
- Selling company assets
You can find advice and strategies for dealing with a winding up petitions here.
Should I continue to trade once a winding-up petition has been issued?
If the company’s bank accounts are frozen, you’ll need to apply to the court for a validation order, which would allow you to release cash and continue trading.
Without a validation order, you’ll be at risk of a liquidator being appointed to examine your personal finances to recover any losses the company makes during the petition period.
If the company is insolvent then you should cease trading immediately.
Help and advice with a winding-up petition
You have options if served with a winding-up petition but you need to think carefully and act quickly.
The stakes are high – it can easily mean the end of your business and additional financial consequences for you personally.
The first action you should take is to contact us.
Use our online booking system to set up a meeting or contact one of our business rescue experts directly. They’ll be able to answer your questions and discuss your options but the sooner you act, the more leeway you have.