Winding-Up Petitions — Defending and Presenting
Frequently Asked Questions
The petition has already been advertised and our bank account is frozen — is it too late?
It is not too late, but you need to act immediately. A solicitor applies for a s.127 validation order to allow the company to continue making payments in the ordinary course of business — wages, essential supplier payments, and other critical outgoings. The court can grant the validation order on an urgent basis. A solicitor simultaneously prepares to oppose the petition at the hearing, negotiates with the petitioning creditor, and advises on whether administration is appropriate (which gives an automatic moratorium on enforcement). The petition hearing is typically 8 weeks after presentation — there is time to respond, but every day matters.
The petition debt is disputed — can we stop the petition?
Yes — the court will restrain the presentation or advertisement of a winding-up petition where the underlying debt is genuinely disputed on substantial grounds, or where the company has a genuine cross-claim or set-off that equals or exceeds the petition debt. The court treats the winding-up jurisdiction as inappropriate for resolving genuinely disputed debts — those disputes should be resolved by ordinary civil proceedings. A solicitor makes the injunction application supported by a witness statement setting out the grounds of dispute in detail and urgently, before the advertisement date.
Can the company propose a Company Voluntary Arrangement to deal with the petition?
Yes — a CVA proposal is one of the most effective responses to a winding-up petition where the company is viable but temporarily unable to pay its debts. The court will usually adjourn the petition to allow a CVA to be proposed and voted on by creditors. If the CVA is approved by 75% by value of unsecured creditors, the petition is generally dismissed (or the petitioner's debt dealt with under the CVA). An insolvency practitioner is appointed to prepare and supervise the CVA. A solicitor works with the insolvency practitioner and advises on the legal aspects of the CVA and the petition adjournment.
We are a creditor — how long does it take to wind up a debtor company?
From serving a statutory demand to obtaining a winding-up order typically takes 8–12 weeks: 21 days for the statutory demand to expire; preparation and presentation of the petition (1–2 weeks); service on the company and advertisement in the London Gazette (7 days); court hearing (typically 8 weeks after presentation). If the company opposes the petition, the hearing may be adjourned, extending the process significantly. However, the pressure of a winding-up petition — particularly the advertisement and bank account freeze — typically prompts payment or a CVA proposal before the hearing. A solicitor advises on the most cost-effective and expedient route to recovery for the specific creditor situation.
What happens to the company's directors and employees when a winding-up order is made?
On a winding-up order: (i) the official receiver is appointed as liquidator (initially); (ii) directors' powers cease — the directors no longer have authority to manage the company, although they continue to assist the official receiver; (iii) employees are automatically dismissed (the winding-up order is a terminating event), and their claims for wages, holiday pay, and redundancy become preferential debts; (iv) the official receiver investigates the conduct of the directors and can apply for director disqualification (CDDA 1986) or a wrongful trading order (IA 1986 s.214). A solicitor advises directors urgently on their position and duties as the winding-up proceeds.