A winding up petition is a request, or legal notice, submitted by a creditor to the courts that demonstrates the steps to close down your company and it is the most serious threat a business can face. It is the last course of action a creditor will take against your company to recover money owed to them. In this article, we are going to discuss how to stop a winding up petition against your company.
If you are served with a winding up petition, it means that a creditor has taken legal action against your company in an attempt to force it into insolvency. The petition will be backed by a court order, and if it is not successfully challenged, your company will be wound up by the courts and its assets sold off in order to repay its debts.
The first step in challenging a winding up petition is to file what is known as a Caveat at the court. This will prevent the petition from being advertised in the London Gazette, which is where potential creditors are made aware of it. Once the Caveat has been filed, you then have 21 days to prepare your defence and file it at court. If you do not file a defence within this timeframe, the court will grant the petitioner permission to have your company wound up.
There are a number of grounds on which you can defend a winding up petition, but the most common are that:
- The debt is disputed and you are therefore not liable for it;
- You have already entered into negotiations with the petitioner in good faith with a view to repayment; or
- The petitioner has acted unreasonably in issuing the petition, for example, by failing to give you sufficient time to repay the debt before taking legal action.
If you are successful in defending the winding up petition, the court will either dismiss it outright or make an adjournment order. This will give you more time to reach an agreement with the petitioner on how to repay the debt. However, if you fail to defend the petition or reach an agreement with the petitioner, the court will almost certainly grant permission for your company to be wound up.
As you can see, if you are served with a winding up petition, it is crucial that you act quickly and seek professional legal advice in order to give yourself the best chance of successfully defending it. Once a winding up order has been made, it is very difficult to reverse, so it is important to take action as soon as possible if you receive notice of a petition being filed against your company.
If your company owes £750 or more to a creditor, they may submit a petition to winding up the company. This usually occurs after the creditor has sent a statutory demand, which gives the company 21 days to repay the debt or dispute the statutory demand. If the debt is not repaid or disputed within 21 days, the creditor can submit a winding up petition to the court.
If the court accepts the petition, it will be sent to the company. The winding up order typically takes effect within 28 days, and in most cases leads to compulsory liquidation. Therefore, it is important to act quickly if you receive a statutory demand, as failure to do so could result in the winding up of your company.
If your business is facing a winding up petition, it is essential to seek professional advice as soon as possible. A licensed insolvency practitioner (IP) can assess your case and represent you in court, with the goal of stopping the winding up petition. To give yourself the best chance of success, you should provide the IP with ample notice of the petition and present strong reasons for why the petition should be stopped.
It is also important to remember that agreements may be possible between the company and its creditors, so all options should be explored before seeking to stop the winding up petition. By working with an experienced IP, you can give your business the best chance of weathering this difficult time.
A winding up petition is a legal action that can be taken against a company that owes money to another party. If the petition is successful, the company will be forced to close its doors and cease operations. This can have serious repercussions for the company’s directors, who will lose their jobs and be removed from their positions of power.
If you have been served with a winding up petition, it is essential that you seek professional advice as soon as possible. Only an experienced solicitor will be able to assess your situation and advise you on the best course of action to take. delay in taking action could result in the dissolution of your company, so act now to protect your business by getting some advice.