David Murray and Alice Chaplin, in our Dispute Resolution & Insolvency team, explain what a winding-up petition is, the consequences for a business and its owner(s) and how we can help.
What is a winding-up petition?
A winding-up petition is the first stage in the process of putting a company into compulsory liquidation. There are different reasons as to why an individual or a company (‘Petitioner’) may seek to wind up a company, but the most common reason is due to the company becoming unable to pay its debts. A Petitioner will apply to the court to wind up the company in the hope that it’s assets can be used to pay creditors, including the Petitioner.
Consequences of a winding-up petition
If you have received a winding up petition, then this may have serious consequences and it is essential that you promptly take the appropriate action.
Once a winding-up petition has been served, notice of the petition will be given in the London Gazette. Once notice of the petition has been given in the London Gazette, it is likely to come to the attention of the company’s banks and creditors as well as employees and customers. This may cause substantial harm to a company’s commercial reputation.
What can I do?
If you do not take any steps to deal with the petition, then the petition will proceed in the usual way, and the court will proceed to hear the petition. It is, therefore, important that if you want to oppose the making of a winding-up order, you deal with the petition promptly.
It is crucial that you act as quickly as possible to investigate the petition and respond to the Petitioner before notice is given in the London Gazette. You must determine whether the debt claimed in the petition is due and payable. If you agree that the debt is payable, then you should take steps to pay it or try to reach an agreement with the Petitioner.
If the debt is disputed, you should write to the Petitioner as soon as possible setting out the details of the dispute, and if necessary, make an application to the court to prevent giving notice of the petition.
How we can help you
If you are served with a winding-up petition and would like legal advice in relation to next steps and whether there are any grounds on which the petition may be challenged, we recommend urgently speaking to a solicitor in our specialist Dispute Resolution and Insolvency team.
For further information or legal advice, please contact law@blandy.co.uk or call 0118 951 6800.
This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice.
