Stopping Winding Up Petition

7 Ways Stop a Winding Up Petition?

A winding up petition, formally requesting the compulsory liquidation of a company that cannot pay its debts, requires focus and prompt action if a company is to survive it.

There are several ways to stop a winding up petition, including:

If you need help understanding the best way forward for your company, use the live chat during working hours, or call us on 0800 074 6757. We’ve helped thousands of directors navigate difficult financial circumstances.

  1. Pay in Full: The most straightforward way is to pay the outstanding debt in full, along with any legal costs incurred by the petitioning creditor. This will typically lead to the withdrawal of the petition.
  2. Dispute the Petition: If you have a valid defence against the debt or the petition itself, you can file evidence and argue your case in court to have the petition dismissed.
  3. Negotiate a Settlement: You can negotiate with the petitioning creditor to reach a settlement agreement, which may involve paying a portion of the debt, agreeing to a repayment plan, or offering other concessions.
  4. Establish Procedural Defects: If there are any procedural defects in the way the petition was filed or served, you can challenge the validity of the petition on those grounds.
  5. Argue Unfair Prejudice: If granting the winding up order would unfairly prejudice the interests of the company’s creditors or shareholders, you can argue that the petition should be dismissed on the grounds of unfair prejudice.
  6. Apply for a Pre-insolvency Moratorium: This provides a 20-business day period during which most legal actions against the company are temporarily paused, giving you time to explore restructuring options.
  7. Put the Company into Voluntary Liquidation: If the company is insolvent and cannot be rescued, you can initiate a creditors’ voluntary liquidation (CVL) to wind up the company’s affairs in an orderly manner.

It’s essential to act promptly upon receiving a winding up petition and seek professional legal and insolvency advice to explore the best course of action based on your specific circumstances.

FAQs on Stopping a Winding up Petition

An insolvency practitioner can provide expert advice on the viability of financial restructuring, assist in preparing a defence against the petition, and potentially negotiate with creditors on behalf of the company. They may also help in drafting a proposal for a Company Voluntary Arrangement (CVA) or guide the company through a Creditors’ Voluntary Liquidation (CVL) if necessary.

Reversing a winding up petition after it has been advertised is challenging but not impossible. The company must act quickly to address the grounds of the petition, such as settling the debt or proving the company’s solvency, to convince the court or the petitioner to dismiss the petition.

Proposing a Company Voluntary Arrangement (CVA) can be risky if not all creditors are in agreement or if the company’s financial projections are not convincing enough to ensure future profitability. There’s also the risk that the CVA might not be approved in time to prevent the winding up if the petition progresses quickly through the courts.