The timeline of a winding up petition
Stage 1. Filing the petition in court
The petitioning creditor (or their legal advisors), will file the winding-up petition in court. They’ll 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
The petition will be accepted by the court. The court writes the hearing date and time onto the petition and returns it to the petitioning creditors. The hearing date is usually 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 (at its registered address, or by hand to an officer of the company), giving you details of the debt and the date for the hearing.
Stage 4. The winding-up petition is advertised
Timeline: approximately 2 weeks prior to the hearing date
An advert will be placed in the London Gazette giving the hearing date details.
Stage 5. Stakeholders may take action
Timeline: between the London Gazette advert date and the hearing date
After the advert is placed, your bank is likely to freeze your bank account, and you may find that other creditors apply to attach their debt to the petition. This means that in order to avoid winding-up, you will now 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 submissions and either adjourn the hearing to a later date, dismiss the petition, 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, your company is exposed to:
- Frozen bank accounts
- Reputation loss
- Potential problems with staffing
- Other creditors attaching themselves to the petition
- Lease terminations (under some lease agreements, these can be automatically triggered)
Once a winding up petition is issued, you are also legally obliged not to allow the company’s assets to be diminished. Therefore to avoid potentially being held personally liable, you should avoid:
- Repaying creditors
- Paying yourself
- Selling company assets
Further information and guidance on strategies for dealing with a winding up petition can be found here.
Should I continue to trade once a winding-up petition has been issued?
Because the company’s bank accounts will be frozen, you will 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 will be at high risk of having a subsequently appointed liquidator looking to you personally to recover any losses the company makes in the petition period.
If the company is insolvent, however, you should cease trading.
Winding-up petition help and advice
Although it can very easily mean the end of your business, a winding-up petition does not have to mean the end at all. You do have options, but you need to think carefully and act quickly.
If you have further 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 business rescue experts directly.