A winding-up order (which follows a winding up petition) is a legal notice issued by a court to force a company into compulsory liquidation, directing that its assets be sold to pay off debts. This action typically occurs when the company is insolvent and has repeatedly failed to respond to creditor demands.

If you have received a winding-up order, it means that your company is on the brink of being liquidated and permanently shut down. For directors, the implications are serious, as you will be subject to an investigation by the Insolvency Service in addition to your company being closed.

It’s vital to note that while challenging a winding-up order is possible, time is of the essence. The window for contesting such an order is exceedingly narrow, meaning you should act immediately.

Winding Up Orders

Why Does a Judge Grant a Winding-Up Order?

A judge grants a winding-up order when your company cannot pay its debts, and it appears to the court that it’s in the best interest of the creditors to close the business and liquidate the assets. The process is initiated only after other debt recovery efforts, such as County Court Judgments (CCJs) and bailiff action, have been exhausted.

As a director, you might face this situation if your company fails to satisfy a statutory demand for payment within the stipulated timeframe, typically 21 days, or if creditors believe the company is insolvent and petition the court for its closure.

The decision to grant a winding-up order is not taken lightly. It is a formal declaration that a company must cease operations and its assets liquidated. The process involves a comprehensive review of a company’s financial situation, including its inability to pay debts as they fall due, the total debts exceeding the company’s assets, or the company’s failure to comply with a statutory demand.

How Long does a Winding up Order take?

From start to finish of a winding-up petition, that is, from the issue of the winding-up order to the court making a formal order to wind up the company, it can take approximately 8-10 weeks if the process proceeds smoothly and is not disputed or defended.

What Happens When a Winding up Order is Granted?

When a winding-up order is granted, your company will enter compulsory liquidation, marking the start of the process of closing your business and selling its assets. This means an official receiver or an insolvency practitioner will take control of your company to oversee the liquidation process. Their job is to recoup as much money for creditors as possible, while closing the company in accordance with legal process.

During this time, you, as a director, will have to cooperate fully with the liquidator, providing all necessary information about the company’s finances and operations. It’s also a period where your conduct as a director may be investigated to ensure all actions taken were in the company’s best interest.

What can you do if a Winding up Order is Made Against Your Business?

Once the court has actually issued a winding up order, there’s very little you can do to prevent the liquidation of your business. The time to act is once the winding up petition has been issued but not yet formally ruled upon in the High Court.

Your options are very limited after a winding up order has been made. However, there are still a few avenues you could explore:

Have the winding up order rescinded or dismissed

You can apply to the court to have the winding up order rescinded within seven days of the order being made. To be successful, you will have to show that the court did not have all the facts or the circumstances of the company are now materially different than when the order was made.

Apply to have the liquidation proceedings stayed

An application to temporarily or permanently ‘stay’ the liquidation proceedings can be made by a creditor, a shareholder of the company, an appointed liquidator or the official receiver.

Appeal the winding up order

It is possible to appeal the winding up order. However, this remedy is limited and can only take place on the basis that the decision was wrong or unjust due to serious procedural or other irregularities.  

Potential Consequences of a Winding-Up Order for Directors

During any liquidation, the liquidator conducts a thorough investigation into directors’ actions during the three years prior to the company becoming insolvent, searching for evidence of wrongdoing or misconduct. Misconduct may involve transactions that unfairly favoured one creditor over others, possibly due to a personal guarantee on a loan, or selling assets at undervalue

Depending on what is discovered, the potential consequences of a winding-up order for directors include:

  • Personal Liability: Directors may face personal liability for company debts if found guilty of wrongful trading.
  • Director Disqualification: You could be disqualified from acting as a director for up to 15 years if misconduct is proven.
NEED PROFESSIONAL WINDING UP ORDER ADVICE?
If you’ve received a statutory demand you cannot pay, have been issued with a winding up petition or a winding up order has been made against your company, you need to act fast.

We can discuss your options with you and help you carefully consider the implications of each. For a free, no-obligation consultation, please get in touch with our team.

How Does a Winding-up Order Affect my Ability to be a Director in the Future?


A winding-up order in itself does not directly prevent you from acting as a director in the future. In most instances, unless an investigation uncovers misconduct or wrongful trading that leads to directors’ disqualification, your capacity to serve as a director in other companies remains unaffected.

However, it’s important to note that the insolvency process includes a thorough review of the directors’ actions leading up to the company’s failure. If this review reveals that you have not complied with your fiduciary duties, engaged in fraudulent trading, or allowed the company to continue trading when it was insolvent (wrongful trading), you could face disqualification.

Disqualification can last up to 15 years, during which you cannot be involved in the formation, management, or promotion of a company without court permission. Additionally, if disqualified, your name will be recorded in the Insolvency Service’s Register of Disqualified Directors, which is public information.

Winding up Order FAQs

Directors should consult with legal and financial advisors to understand their position, gather evidence to dispute the debt if applicable, and consider negotiating with creditors to settle debts or secure an adjournment.

When a winding-up order is issued, the company ceases operations, leading to job losses. Employees may claim unpaid wages, holiday pay, and redundancy from the National Insurance Fund up to statutory limits.

All company assets are frozen and eventually sold or liquidated by the appointed liquidator. The proceeds are used to pay off creditors in order of priority, as defined by insolvency law.

If a director is found guilty of wrongful trading, they could be held personally liable for company debts from the point they knew (or should have known) the company had no reasonable prospect of avoiding insolvency.