Can you get a Winding Up Petition withdrawn, stopped or dismissed?

You can protect your business from a Winding Up Petition, but you need to act fast. Ignoring the petition leads to it being advertised in seven days. Your bank typically freezes your company’s account then, making trading tough.

The petition goes to court next, where it’s either rejected or accepted. If accepted, the court issues a Winding Up Order, making it hard to rescue your company from liquidation.


What does a Winding Up Petition mean for us?

A Winding Up Petition (WUP) is a legal request from a creditor to repay a debt. If the debt remains unpaid, the petition can compel your company into Compulsory Liquidation.

A creditor can file a WUP for debts over £750. However, the actual costs of serving a petition usually make the amount higher. Creditors usually resort to issuing a petition as a last option, after multiple unsuccessful attempts to collect a debt.


Can I protect my company from a Winding Up Petition?

This is simply yes. If you’ve received a petition or sense one’s coming, immediate action is crucial.

The easiest way to dismiss the petition is by paying it. However, there are alternative options. If you can’t afford to pay the debt in full or if you dispute it, seek professional advice promptly. A licensed insolvency practitioner can guide you on the best course of action to take.


Unlocking the effective ways to prevent a Winding Up Petition?

Once you have received a Winding Up Petition, there is a seven-day time limit to do one of the following:

1. Complete the remaining debt payment 

Clearing the total amount you owe, alongside the creditor’s expenses for initiating the petition, stops the creditor from advertising the WUP in the Gazette. 

Other financing options like invoice finance or asset-based lending can quickly inject cash to assist with the payment. If you settle the debt and no other creditors intend to pursue it, the court will dismiss the petition.


2. Discuss an informal repayment arrangement 

If you’re unable to pay the debt in full but aim to resolve it, consider negotiating an informal repayment plan to pay gradually over time. This effort might convince them not to publish the petition in The Gazette. 

Nonetheless, given their prior attempts to recover the debt, the creditor may question your ability to adhere to the agreement.


3. Defend the petition 

You can defend a Winding Up Petition based on four grounds:

1. Disagreement regarding owing money to the creditor.

2. Dispute over the amount of debt.

3. The creditor owes you money, nullifying the debt or reducing it below £750.

4. Procedural error or delay, like inaccurate details on the WUP or incorrect issuance of the petition.

If you plan to challenge the petition, you must submit a witness statement to the court at least five business days before the scheduled hearing. Ensure you provide evidence supporting your reasons. 

This is a significant step and should only be taken if you have substantial evidence to dispute the WUP.


4. Get a Company Voluntary Arrangement (CVA).

A Company Voluntary Arrangement is a structured insolvency process that you can establish with the aid of an insolvency practitioner. They’ll suggest a manageable repayment plan to your creditors, aiming to settle part or all of the owed sum through monthly instalments spanning around three to five years.

In this scenario, it’s not solely the creditor who lodged the petition that must approve your proposal. If 75% of your creditors consent to the CVA, the court can opt to dismiss the WUP.


5. Enter into an admission process 

Administration provides the company with respite to implement a recovery strategy. Upon entering administration, an eight-week moratorium is initiated, halting all legal proceedings against the company, including the Winding Up Petition. This allows an insolvency practitioner to assess whether and how they can salvage the company.


6. Choose Pre-pack admission 

Another option you can choose is Pre-Pack Administration, which entails selling the business or its assets to a suitable buyer, frequently a director of the current business. 

The new company can then carry on trading without the looming threat of the Winding Up Petition, albeit under a fresh name.

Before placing the company into administration, you must engage an insolvency practitioner to evaluate the company’s eligibility for sale and organise the transaction.


7. Request the court for an adjournment

You can also consider submitting a request to the courts to postpone or cancel the Winding Up Petition hearing. A detailed statement outlining your reasons will be required.

The court will choose to have an adjournment if it believes your company is feasible and could repay the debt given additional time.


8. Make the company liquidate by the CVL 

If you’re unable to settle the debt and the company is no longer financially sustainable, voluntary liquidation through a Creditors’ Voluntary Liquidation (CVL) can serve as a final option. 

Opting for a CVL is typically more favourable than being compelled into Compulsory Liquidation by the court, particularly regarding personal consequences.


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Need Professional Assistance? 

If you’ve received a Winding Up Petition or faced threats from a creditor, there are solutions to explore. We’ll evaluate your debt situation and the financial state of your company to guide you towards the most suitable path. Contact our experts today for a complimentary, same-day consultation.

David Jackson MD
Senior Partner at Vanguard Insolvency Practitioners | Website

I am an insolvency professional with a distinguished career specialising in commercial insolvency, adeptly navigating Creditors Voluntary Liquidation, Company Voluntary Arrangements, and Company Administrations. With a comprehensive understanding of insolvency laws and an unwavering commitment to ethical practices.