How to Stop a Winding Up Petition

What is a winding up petition?

A winding up petition is a legal document filed by a creditor against a company that owes them money. It is a formal demand for the liquidation of the company’s assets to repay the debt owed to the creditor. Essentially, it’s a step towards forcing a company into compulsory liquidation.

The creditor must demonstrate to the court that the company is unable to pay its debts, and filing a winding up petition is often seen as a last resort for creditors who have exhausted other attempts to recover what they’re owed.

Once the petition is filed, the court will schedule a hearing where the company can present its case. If the court grants the petition, a liquidator will be appointed to sell off the company’s assets and distribute the proceeds to creditors according to a priority order set out in insolvency law.

At Expert Commercial Law, we have access to a specialist panel of commercial solicitors experienced in winding up petitions, including licensed insolvency practitioners. If you would like more information on how we can assist you, please do not hesitate to get in touch with our team today.

What does it mean to wind up a company?

To wind up a company means to bring its operations to an end in an orderly manner. This typically involves selling off its assets, paying off its debts, and distributing any remaining funds or assets to its shareholders or creditors, depending on the specific circumstances and legal requirements.

A validation order is a company’s court order used in insolvency proceedings, specifically when a company faces a winding-up petition. It acts as a temporary relief measure, essentially “unfreezing” the company’s bank accounts and validating certain transactions even though the winding-up process is ongoing.

Winding up can occur voluntarily or involuntarily. In a voluntary liquidation, the decision is made by the company’s shareholders, often due to reasons such as insolvency, completion of the company’s objectives, or simply because it’s no longer viable to continue operations. An involuntary winding up is typically initiated by creditors through legal actions such as a winding up petition.

During the winding up process, a liquidator may be appointed to oversee the process and ensure that assets are appropriately distributed according to legal requirements and priorities. Once all debts are settled and any remaining assets are distributed, the company is dissolved, and it ceases to exist as a legal entity.

Issuing a winding up petition

Issuing a winding up petition involves formally submitting the petition to the appropriate court. Here’s a general overview of the steps involved in issuing a winding up petition:

  • Preparation: This may include sending formal demand letters, seeking payment arrangements, or engaging in negotiations with the debtor before issuing a winding up petition.
  • Legal Advice: It’s advisable for the creditor to seek legal advice from a solicitor or insolvency practitioner experienced in corporate insolvency matters. They can provide guidance on the legal requirements for issuing a winding up petition and help prepare the necessary documentation.
  • Drafting the Petition: The winding up petition is a formal legal document that sets out details of the debt owed by the debtor company, the grounds for the petition (typically insolvency or inability to pay debts), and other relevant information. The petition must comply with the requirements of the applicable insolvency laws and court procedures.
  • Filing the Petition: Once the petition is prepared with the relevant witness statements, it must be filed with the appropriate court. The creditor will need to pay a filing fee, and the court will assign a hearing date for the petition.
  • Serving the Petition: After filing the petition, the creditor is required to serve a copy of the petition on the debtor company at its registered office. This serves as formal notice to the company that a winding up petition has been issued against it.
  • Court Hearing: On the scheduled hearing date, the court will consider the petition and hear arguments from both the creditor and the debtor company. The court will decide whether to grant the winding up order based on the evidence presented.
  • Consequences: If the court grants the winding up order, a liquidator will be appointed to wind up the affairs of the company, sell its assets, and distribute the proceeds to creditors according to the priority set out in insolvency law. The company will cease to exist as a legal entity.


How to stop a winding up petition

Stopping a winding up petition can be a complex and challenging process, especially if the company is unable to pay its debts. However, there are several steps that a company can take to try to stop or challenge a winding up petition:

  • Negotiate with the Creditor: The company can try to negotiate with the creditor to reach a settlement or payment plan that satisfies the debt. This could involve agreeing to repay the debt in instalments or offering alternative forms of repayment.
  • Apply for an Injunction: The company can apply to the court for an injunction to temporarily halt the winding up petition proceedings. This may be granted if the company can demonstrate that it has a valid defence against the petition or that there are other compelling reasons to stop the proceedings.
  • Dispute the Debt: If the company disputes the debt claimed by the creditor, it can file a defence with the court challenging the validity or amount of the debt. The court may adjourn the winding up petition hearing to allow time for the dispute to be resolved. You can dispute the winding up petition once you have applied for an injunction to prevent the petition from being advertised in the London Gazette.
  • Explore Alternative Solutions: The company may explore alternative solutions to address its financial difficulties, such as restructuring its debts, agreeing a time to pay arrangement, seeking refinancing, or entering into a formal insolvency procedure like entering administration or a Company Voluntary Arrangement (CVA).
  • Attend the Court Hearing: If the winding up petition proceeds to a court hearing, the company should ensure that it is represented at the hearing to present its case and argue against the petition. The company may be able to persuade the court to dismiss the petition or grant a more favourable outcome.

Overall, stopping a winding up petition requires proactive and decisive action on the part of the company, often with the assistance of legal professionals specialising in insolvency matters.

How can Expert Commercial Law assist?

If you have any queries on how to stop a winding up petition or issuing a winding up petition, then our panel of solicitors can assist you.

All of the commercial dispute solicitors on our panel have experience and expertise in the insolvency process. Each solicitor is vetted before being allowed onto our panel, and we only select the best in the business. All of our solicitor firms are authorised and regulated by the Solicitors Regulation Authority (SRA).

Our solicitors also help with other commercial claims, such as breach of contract and CCJ removal.

Please note we are not a firm of solicitors; however, we maintain a panel of trusted and regulated legal experts. If you contact us in relation to a commercial law case, we will pass your case on to a panel firm in return for a fee from our panel firms. We will never charge you for passing on your case to a panel firm.


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Please note, we are not a firm of solicitors; however, we maintain a panel of trusted and regulated legal experts. If you contact us in relation to a commercial law case, we will pass your case onto a panel firm in return for a fee from our panel firms. We will never charge you for passing on your case to a panel firm. 


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