The issuing of a Winding-Up petition is not an action that should be taken lightly and if you are on the receiving end of such a petition, you need to act quickly and within 7 days.  Before the petition has been served upon the company a statutory demand would have been served which provided 21 days to respond, this is why the petition is required to be responded to within 7 days.  Any creditor who is owed £750 can issue a Winding-Up petition.  If you are contemplating issuing a Winding-Up petition, you should take legal advice before doing so.  There may be other options available to you that you have not explored, and that may not be as costly.  You may even be able to recover the debt that is owed to you with expert assistance from a lawyer who has experience in debt recovery. See our Debt Recovery service here.

If your company receives a Winding-Up petition, we can assess your situation, advise on the best course of action and help to prevent your company from being liquidated which would mean an end to your business.  A Winding-Up petition cannot be ignored, it is the first step in a compulsory liquidation of the company and the liquidator can realise the company’s assets and distribute the proceeds to the company’s creditors.   Compulsory liquidation is the liquidation of a company commenced by a Winding-Up order made by the court. The other mode of liquidation is where the members of the company voluntarily liquidate the company.

If the money is owed, it is always better in the long run to talk to the creditor/debtor; if there is a any dispute the money is owed, again it is always better practice to talk with the creditor/debtor.  We can do that for you, because we know how difficult these conversations can be.  Liquidation is very public, the petition is advertised, and once this occurs the bank accounts are likely to be frozen by the banks which will stop the company trading.  Liquidation usually results in the company being dissolved and no longer able to trade.

If however you have done all that you can to avoid the presentation of the Winding-Up Petition, and there is an unreasonable or unrelenting insistence on the part of the Creditor, then it is still possible to apply to court for an injunction to prevent the presentation of the Petition.  In order to obtain an injunction from the court to prevent presentation of the petition, you will need a  comprehensively drafted response to the statutory demand for the debt, which should set out the grounds for dispute. Your response should demonstrate reasonable and substantial grounds of dispute.

We can assist you in taking steps to obtain an injunction to restrain the presentation of the Winding-Up petition and we can help you decide the best way to dispute the debt.  These matters should always be dealt with swiftly, and if money must be paid, it should not be left until presentation of the Winding-Up Petition.  You should be aware that a court will only consider an application for an injunction if you can present solid evidence of a genuine and substantial dispute of the debt or of the fairness of the Winding-Up Petition.

Other options we can consider in our response to the creditor is to request an undertaking not to present or advertise the petition without prior notice, and if not, to provide warning that if a petition is presented then an application will be made to strike it out as an abuse of process.

There are prescribed forms which must be used under the Insolvency Rules.  You would also need to support any applications with a witness statement by an officer of your company.  We can assist you with drafting and completing any forms, to ensure that you include full details of the grounds upon which the debt is disputed; all evidence such as correspondence between the parties and a financial summary of the company, including the balance sheets, forecasts etc.

The most common grounds on which a debt can be disputed and an injunction granted are that:

The Petition is an abuse of process

The Petition is bound to fail

Your company has a genuine counterclaim that would reduce the debt to less than £750

The Petition is unfair

There is an ulterior motive behind the Petition other than for the purposes of genuinely seeking winding up

​The Insolvency Rules require forms (where available) and evidence to be filed at the court before the hearing date of the Petition and there are strict timescales to be adhered to.   The 2016 Insolvency Rules do not have standard application forms, however under Rule 1.35 they do require specific wording which must be included in any court application.  In addition, it is a requirement that a copy of the evidence for the opposition be sent to the creditor who presented the Petition, and this must be done within a reasonable time.

Only Directors of the company are entitled to appear at the petition hearing in order to oppose the creation of a winding up order.   We can represent you at the hearing and make out your case on your behalf.

We can assist you and your company throughout the proceedings whether it be making urgent applications or if the matter has progressed we can help you to make sure you have submitted all your evidence before a hearing.