UK Winding-Up Petitions

What is a winding up petition

If a company owes money and has refused or neglected to pay the debt, then a creditor can apply to wind it up by presenting a petition to court for that purpose. A winding-up petition is usually presented by a creditor on the grounds that the company cannot pay its debts and this has to be proved to the court.

So how is it proved that the company cannot pay its debts?

The court will regard a company as being unable to pay its debts if any of the following occurs:

  • A creditor obtains judgment against the company and execution is unsatisfied; in other words the sheriff or bailiff is unable to seize enough assets to clear the debt.
  • It is proved to the court that the company cannot pay its debts when they fall due; for example, no payment is made in response to a letter of demand
  • It is proved to the court that the company's total debts exceed its total assets.

To ensure that all legal requirements are met a solicitors usually issues a petition. The winding up process is not simply a matter of completing a petition and presenting it to the court. A court hearing can result in costs being awarded against either party. For example, costs may be awarded against the creditor if the court believes it has  used the winding up procedure inappropriately where the company has good reason for saying it does not owe the money.

Advertising the petition

The creditor must advertise that a petition has been issued no sooner than 7 business days after the petition was served and no later than 7 business days before the winding up hearing.


What happens at the hearing?

The procedure for the hearing is likely to differ depending on the court in which you apply for a winding-up order.   The court will look at all the facts and will decide on whether a winding up order is to be granted. 


What happens after the winding-up order is made?