Winding Up Petitions: What You Need to Know

A winding-up petition is a serious legal action that can have severe consequences for a company. It is a formal request to the court to liquidate a company that is unable to pay its debts. Understanding the process and acting swiftly is crucial to protecting your company’s interests.

What Is a Winding-Up Petition?

A winding-up petition is typically filed by a creditor, such as His Majesty’s Revenue & Customs (HMRC), when a company owes money and has failed to pay. Once a petition is issued, its details can quickly become public. Currently, winding-up petitions are made publicly available online within two days of issuance. This can trigger a series of adverse events, including damage to the company’s reputation and financial distress.

Many directors may delay action, waiting for formal proof of a petition, which can waste valuable time. Others may assume no petition exists simply because they did not receive prior warning. However, such delays can be detrimental, as the process moves quickly once a petition is filed.

What is the procedure to present a Winding Up Petition?

A winding-up petition can be issued by any creditor owed at least £750. HMRC is one of the most common petitioners in these cases.

Petitions are typically issued and heard at the High Court of Justice, Business and Property Courts of England & Wales, Insolvency and Companies List (formerly the Companies Court within the Chancery Division). The court is based at the Royal Courts of Justice (Rolls Building) in London.

Petitions may also be issued and handled at other High Court District Registries or at a County Court with insolvency jurisdiction if the company’s paid-up share capital is below £120,000.

How Are Winding-Up Petitions Advertised?

Once a company has been served with the petition, the creditor can advertise it in the London Gazette after a seven-day period. This advertisement can only be stopped through legal negotiations or a court injunction to restrain its publication.

If the petition is advertised, most banks will freeze the company’s accounts to comply with Section 127 of the Insolvency Act 1986. This provision states that any disposal of company property—including payments, asset transfers, or share sales—after a petition is filed is void unless approved by the court. Freezing a company’s bank accounts can halt trading, putting the business at risk. However, legal avenues such as validation orders can be pursued to unfreeze accounts for necessary transactions.

Consequences of a Winding-Up Petition

1. Frozen Bank Accounts

Once advertised, banks typically freeze a company’s accounts, preventing access to funds and disrupting business operations.

2. Damage to Reputation

A winding-up petition is a matter of public record and can significantly harm a company’s reputation, impacting customer and supplier confidence.

3. Invalid Payments

All payments made after the filing of the petition are considered invalid unless authorised by the court.

4. Risk of Liquidation

If the petition succeeds, the court will order the company’s liquidation, leading to the sale of assets to pay off creditors.

Responding to a Winding-Up Petition

1. Act Quickly

Delays can lead to frozen bank accounts and an increased risk of liquidation. Immediate action is essential.

2. Verify the Petition

Obtain a copy of the petition to assess the debt details and the petitioner’s claims.

3. Dispute the Debt (If Applicable)

If the debt is disputed, formal legal steps should be taken. Negotiating with the petitioner to pay the undisputed portion can sometimes delay or stop the petition’s advertisement.

Expert Winding-Up Petition London Solicitors

At LEXLAW, we understand the urgency and stress that a winding-up petition can cause. Our experienced team of legal professionals can assist by:

• Obtaining a copy of the winding-up petition urgently
• Negotiating with creditors to establish payment plans or settlements
• Representing you in court to challenge the petition
• Advising on all available options, including restructuring and insolvency procedures

We’re masters of winding-up petition. We are a specialist City of London law firm made up of Solicitors & Barristers. We’re based in the Middle Temple Inns of Court (next to the Royal Courts of Justice where the High Court and Central London County Courts are based).  We’re experts in dealing with matters surrounding insolvency in particular our team have unparalleled experience at both issuing and defending winding up petitions vigorously at the Royal Courts of Justice (Rolls Building), or the relevant High Court District Registry or County Court with jurisdiction under the Insolvency Rules.

For expert legal advice and representation, Contact us today for on ☎ 02071830529 | ✉ [email protected]