What is a Winding Up Petition?
A winding petition is a last resort for creditors attempting to recoup sums of money owed to them. It is a legal notice obtained from the courts that requires that the debtor’s business be closed down, or ‘wound up’, with money recouped via the sale of assets being used to repay company debt.
Winding up petitions are a serious step for a creditor to undertake, and often come as a result of them feeling that there are no more options available to them to get their money back; perhaps as a result of the debtor failing to adhere to agreements, or not answering correspondence.
The impact of a winding up petition can be more significant than just a hit to the indebted company’s bank account. Once actioned, the petition is advertised in the Gazette, meaning all the firm’s creditors could find out that it is in financial trouble. The same is true for their bank, who will usually freeze their accounts as soon as they get wind of the situation. It may also cause suppliers and customers to stop dealing with the business.
In order for an application for a winding up petition to be considered, the debt must be more than £750, and have been outstanding for over 21 days. Anything less than that will lead to an application being summarily rejected.
If the order is made, the creditor can look to appoint an insolvency practitioner to act on their behalf to retrieve the money owed. In the eyes of the courts, this is not considered as a method of debt recovery. Instead, it is seen as a sign that the company cannot pay its debt, and is the beginning of the process of winding it up.
Should a winding up petition not be dealt with by the debtor in the allotted time, or the money not be paid back in full, it is likely that the winding up petition could be made into a winding up order — a more serious notice that leads to compulsory liquidation shortly after.
What to Do if You Have Received a Winding up Petition from Your Creditors
The most important thing you must do if you have received a winding up petition is to act quickly, act efficiently, and act intelligently. You cannot simply ignore a winding up petition in the hope that the situation will de-escalate and go away. You must meet it head on to stop it seriously impacting the future of your business.
Receiving a winding up petition is a difficult time in the life of any business. With the future of the company in the balance and the possibility of liquidation looming, tensions are likely to be high. Despite this, you will only have a limited time to act before things get even worse.
Once the petition is issued, you have seven days before the petition is served and made public in the London Gazette. It is possible to avoid this happening, but to do so you must act with good intention.
How Insolvency Practitioners Help with the Winding Up Petition Procedure
When a winding up petition has been issued against you, it is important that you approach an insolvency practitioner who can assess the situation and devise the optimal method of saving your business, and repaying company debts. This may include;
- Assessing your firm’s finances to uncover the best course of action.
- Exploring the best way to repay company debts
- Disputing the winding up petition
When a winding up petition has been issued, it is vital that you heed any advice your insolvency practitioner gives you to avoid any potential personal liability down the road.
Your insolvency practitioner will guide you throughout the process and provide you with all of the best options for you and your business.
Download our FREE Guide to Liquidation
If you’re a company owner looking to close down, whether your business is solvent or insolvent, liquidation could be an option for you. While ascertaining whether or not liquidation is for you isn’t so difficult, determining which of the different methods is right for your situation can be.
Our dedicated liquidation guide will educate you on the various different methods you’re faced with — to help you decide which is best-suited for you, providing you with the most upside possible. Click the button below to find out more!
How to Stop a Winding Up Petition
Being served with a winding up petition is a serious issue that can have a lasting impact on your business. It is important that you know what can be done to put a stop to it; from communicating with creditors and paying up front, to disputing the debt and business restructuring, there are several options open to you.
How Inquesta Can Help with Defending a Winding Up Petition
If your business is facing serious financial difficulties and you are issued a winding up petition, it is important that you get in touch right away.
At Inquesta, our winding up petition experts can explain the entire process to you from start to finish to ensure clarity and ease any stress.
We work with the ethos that our clients’ best interest should always be at the forefront of everything we do — and that shows in how we converse, deal with, and act to support them.
With over 20 years of combined experience, assisting companies from all manner of positions and industries to get through the process of defending a winding up petition, you can be assured that you and your business are in the best possible hands.
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Our Specialist Team
Meet the dedicated team of insolvency practitioners at Inquesta who are trained to assist and defend you through the winding up petition process.
Steven Wiseglass
Director of Insolvency
A co-founder of Inquesta, Steven is a licensed Insolvency Practitioner with over a decade of experience in the field. He is a member of the Insolvency Practitioners Association, Association of Business Recovery Professionals (R3), and his insolvency licence is issued by the Insolvency Practitioners Association. In addition, he sits on the R3 committee of the North West Regional Committee.
Steven specialises in advising directors of small to medium-sized businesses, and has a wealth of expertise in providing the most appropriate advice whatever the firm’s circumstances may be. He has also been instrumental in helping company directors save their business and rebuild them into successful enterprises.