020 8308 3610 contact us

Winding up Petitions

FIND OUT MORE

A winding up petition is legal action taken by a creditor against a company that owes money. In this section, we explain the process and explore the options for opposing a winding up petition.

A winding up petition is legal action taken by a creditor against a company that owes money. In this section, we explain the process and explore the options for opposing a winding up petition.

Issuing a winding up petition is the start of a process of attempting to have a company put into ‘compulsory liquidation’. There are many reasons why a petitioner may seek to have a company wound up. The most common reason is that the company has become unable to pay debts owing to its creditors. HM Revenue and Customs (HMRC) is the most common petitioner, taking action when a company has not paid its taxes.

Alongside HMRC there are other individuals and organisations who can bring winding up proceedings against a company. These include:

  • Suppliers of a company who are owed more than £750;
  • Any creditors of the company (including landlords of the company);
  • Shareholders where it is “just and equitable” to do so;
  • Employees (in exceptional circumstances);
  • Any person/organisation who holds a judgement debt against the company; and
  • The Secretary of State.

The effects of a winding up petition

Once a winding up petition has been presented, it can have serious consequences including:

  • Difficulty in the company obtaining credit;
  • Frozen company bank accounts, impacting on day to day trading*;
  • Any dispositions that the company makes could potentially be void*;
  • Damage to the company’s reputation;
  • In the event the company is wound up, a risk for directors who could be personally liable in respect of any personal guarantees, fraudulent trading, wrongful trading, or misfeasance; and
  • Legal costs in defending and/or responding to the winding up petition;

*There is a possibility for a company to apply for a validation order in the event of difficulties arising from bank accounts being frozen or the risk of a disposition becoming void. The legal experts at Bankruptcy Solicitors are on hand to assist you here.

Opposing a winding up petition

There are grounds for a winding up petition to be opposed. Examples include:

  • The sums owed to the creditor are less than £750.00
  • The alleged debt owed is genuinely disputed on substantial grounds by the company. In this context, substantial means that the dispute must be “real as opposed to frivolous;;
  • The company has a right to set-off against the creditor which exceeds the amount claimed;
  • The petitioner has failed to comply with the relevant procedure, or there is a technical error which should lead to the winding up petition being dismissed;
  • The court doesn’t have jurisdiction to wind up the company. (i.e the Company doesn’t have a centre of main interests in England & Wales); and
  • Where there has been an inordinate delay in the creditor presenting a petition

How long does it take?

A winding up petition hearing is usually heard between eight and twelve weeks after it has been presented.

If the matter is adjourned, the court will not usually grant an adjournment for more than 18 weeks, unless there are exceptional circumstances. However, a company can request more than one adjournment. Depending on how many adjournments a company is permitted and the period of time between each of those adjournments, it could take as long as 18 months before a winding up petition is either dismissed or results in the company being wound up by the court.

At Bankruptcy Solicitors, we would recommend obtaining as much relevant documentation as possible prior to contacting us. Such documentation may typically include the statutory demand (if relevant), the winding up petition and any other documents relating to the debt sought.

How much does it cost?

In most cases, we can agree a fixed fee to represent a company at the Companies Court. If you wish to present a winding up petition against a company, the costs and likely disbursements that will be incurred.

For more information on presenting or challenging a winding up petition, please contact our team of experts by emailing insolvency@bankruptcy-solicitors.com or call 020 8308 3610 today.

Meet the Winding up Petitions team