Grounds to Challenge the Petition
Where the grounds to challenge the petition exist it would be sensible to oppose the winding up petition. A winding up petition may be challenged by a company on the following grounds:
- The debt alleged in the demand to be owing is genuinely disputed on substantial grounds by the company.
- The company has a genuine right of set-off against the creditor which exceeds the amount claimed in the demand.
- In certain other limited circumstances (for example such as Jurisdiction, Company likely to become insolvent, Technical or procedural error or Delay).
Procedure to Oppose
The procedure to oppose a winding up petition is to file a witness statement in opposition in court not less than five business days before the date of the hearing of the petition (rule 4.18(1), Insolvency Rules). A copy of the evidence must also be sent to the petitioning creditor as soon as reasonably practicable (rule 4.18(2), Insolvency Rules).
The company is entitled to appear at the hearing of the petition and to oppose the making of a winding up order. It is usual for a company to instruct solicitors and/or counsel to appear on its behalf at the hearing.
If the company chooses not to instruct legal representatives, any director is entitled to appear at the hearing on the company’s behalf, but other agents (such as the company’s accountant) cannot.
Where a petition is opposed by the company on grounds which require the consideration of evidence (for example, where the company disputes the petition debt) the practice of the Registrars of the Companies Court at the Royal Courts of Justice is to adjourn the hearing to allow for the issue to be argued before the Registrar in Chambers.
How to Challenge or Defend a Petition?
If there is a disagreement over the debt, the debtor must defend the winding-up petition. If there is a genuine doubt as to whether the debtor owes the creditor money, or if the debtor is able to set off the debt, which would cancel out the amount owing to the creditor, or, alternatively, decrease it to less than £750, the winding up petition might be challenged.
To establish that there is a real disagreement about a debt, the debtor must furnish the Court with adequate proof (not just an honest belief) that they are not obligated to pay the amount.
When a debtor learns of a winding-up petition, he or she should write to the creditor to confirm that they are challenging the debt and seek legal assistance. The debtor should request that the creditor refrain from proceeding with the winding up petition, but if the creditor refuses, the debtor should either seek an injunction to prevent the winding up notice from being published in the London Gazette, or inform the creditor that they will oppose the petition at the Court hearing on the grounds that they are disputing the debt.
The laws governing winding-up petitions and insolvency processes are often complicated, so it is critical to seek legal assistance from a specialist team of insolvency solicitors as soon as possible.
How Can We Help you Oppose a Winding Up Petition?
Our specialist winding-up petition lawyers are experts in defending winding-up petitions. We can advise you as to the specific merits and demerits of your case and can assist you in opposing winding up petitions and negotiating with creditors. If your company has been issued a winding-up petition or statutory demand, you may be able to challenge that petition on the following grounds:
That the debt alleged in the statutory demand or petition to be owing is genuinely disputed on substantial grounds by your company; Your company has a genuine right of set-off against the creditor that exceeds the amount claimed in the statutory demand; or In certain other limited circumstances (for example such as jurisdiction, technical or procedural error or delay).
To oppose a winding-up petition, you will initially need to file a witness statement in opposition with the Court within five business days before the date when the petition will be heard by the Court (rule 7.16 of the Insolvency (England and Wales) Rules 2016). A copy of that witness statement will need to be provided to the petitioning creditor at least five business days before the hearing.
Your company is entitled to appear at the petition hearing so as to oppose the making of a winding-up order. It is a routine matter for companies to instruct solicitors and/or barristers to appear on their behalf at the hearing.
Our team of expert Barristers & Solicitors is able to advise your company on opposing a winding-up petition. Contact us by clicking here or calling 02071830529.
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The information on this website is not legal advice; you should always obtain specific advice on the circumstances of your case. Our Winding-up Petition Solicitors & Barristers provide specialist legal advice based on decades of expertise. Click here or call +442071830529 to get in touch. For regulatory reasons we do not take on low value cases nor provide free legal advice, information or guidance and our team cannot answer questions from non-clients.