Winding-up Petition

Winding-Up Petitions – What You Need to Know

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What is a winding-up petition?

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A winding-up petition is a formal court application made by a creditor to close down a company that cannot pay its debts. To apply, the creditor must usually be owed at least £750 and will normally have already attempted other recovery methods, such as issuing a statutory demand or pursuing enforcement action.

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If granted, the petition can have immediate consequences — once the company’s bank becomes aware, accounts may be frozen, and other creditors are able to join the petition. The court will then set a date to hear the matter.

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How do I know if a winding-up petition has been issued?

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All petitions in England and Wales are advertised in the London Gazette. Directors should regularly check if they suspect action may be taken.

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What to do if you receive a winding-up petition

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Swift action is crucial. If a petition is ignored, the court is likely to issue a winding-up order, which forces the company into liquidation and ends trading. Early advice can create opportunities to stop or challenge the petition.

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Can a winding-up petition be challenged?

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Yes. If directors dispute the debt, a formal defence must be lodged in court at least five days before the hearing, setting out the reasons and evidence. If part of the claim is admitted, that element should be dealt with separately — ideally settled in full before the hearing.

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It is also possible to apply for an injunction to prevent the petition being advertised in the Gazette. This is important because once advertised, bank accounts freeze and other creditors may join the petition. If the court accepts the defence, it may adjourn the hearing to give time for the matter to be resolved.

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The London Gazette and Validation Orders

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Once a petition is served, it is usually advertised in the London Gazette within seven days. This alerts other creditors and typically results in the company’s bank accounts being frozen.

If payments need to be made from frozen accounts, directors can apply for a Validation Order. This court order allows specific transactions to go ahead, provided the company can show that doing so benefits both creditors and the business. Applications normally require financial forecasts, a statement of affairs, and justification for the payments.

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What happens if no action is taken?

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If a petition is not addressed, the court will issue a winding-up order, placing the company into compulsory liquidation. A liquidator (usually the Official Receiver) will be appointed, company assets sold, staff made redundant, and an investigation carried out into the conduct of the directors.

Compulsory liquidation is often seen as the least favourable route — it removes director control, can involve higher costs, and leaves little scope for an orderly closure or restart.

Alternatives to compulsory liquidation

If directors act quickly, there are several ways to avoid compulsory liquidation:

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• Administration – Protects the company from creditors while a restructuring or sale is arranged.

• Pre-Pack Administration – Allows directors or new owners to buy back business assets through a new company, preserving value and continuity.

• Company Voluntary Arrangement (CVA) – A structured repayment plan, typically over five years, enabling the company to continue trading while gradually repaying creditors.

• Creditors’ Voluntary Liquidation (CVL) – If rescue is not viable, directors may choose a CVL to bring closure in a controlled manner, appointing their own liquidator (rather than leaving it to the court).

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Why early action matters

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Paying off the petitioning creditor does not always end the risk — once advertised, other creditors can attach themselves to the petition. That’s why it is vital to seek advice before the petition reaches court.

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How BCIA can help

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At BCIA – we specialise in supporting directors under creditor pressure. We will:

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• Assess your company’s position and provide clear options.

• Explore the potential to challenge or defend a petition.

• Negotiate with creditors to seek affordable settlements.

• Implement rescue strategies such as administration or CVAs where viable.

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Our advice is professional, practical, and empathetic — ensuring directors understand both their responsibilities and their rights.

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👉 If you have been threatened with or served with a winding-up petition, contact BCIA immediately. The earlier you act, the more solutions are available.