If you’re facing a winding up petition, discover everything you need to know about the winding up petition process and what to expect in this blog.
When your business is in financial distress, few things are as alarming as receiving a winding up petition. But with the right understanding and swift action, it doesn’t have to be the end of the road.
In this blog, we’ll walk you through everything you need to know about the winding up petition process - from what it means, who can issue one, and what the timeline looks like, to the serious consequences it brings and how you should respond.
What is a Winding Up Petition?
A winding up petition is a legal action taken by a creditor who is owed £750 or more by a company. It is a formal request to the High Court to liquidate a company that cannot pay its debts. If granted, the petition can lead to compulsory liquidation, meaning the company is forced to cease trading and its assets are sold to repay creditors.
When Can a Creditor Issue a Winding Up Petition?
A creditor - such as HMRC, a supplier, or a lender - can issue a winding up petition if:
- The company owes £750 or more
- The debt is undisputed
- A statutory demand has been ignored or payment has not been made after court judgment
This is often seen as a last resort when informal negotiations and other recovery actions have failed.
The Winding Up Petition Timeline
The winding up petition process unfolds quickly, and missing even a single deadline can seriously impact your business’s future. Here’s a breakdown of what typically happens and when:
Day 1 - Petition Issued
A creditor files a winding up petition with the High Court and serves it on your company, usually via a process server. You’ll know this has happened when a representative arrives at your registered office. It’s essential to act immediately - every day counts.
Day 7 - Petition Advertised in The Gazette
Unless action is taken, the petition is advertised in The Gazette seven business days after service. Once advertised, banks often freeze your company’s accounts to protect the interests of all creditors which can instantly stop your ability to trade.
Before the Hearing - Days 7 to 28+
You may have a few weeks before the court hearing, depending on how soon a date is scheduled. During this window, you can settle or dispute the debt, apply for an injunction to stop the advertisement, or negotiate with the creditor to withdraw the petition.
Court Hearing - Typically 4 to 6 Weeks from Service
At the court hearing, the judge will decide whether to grant a winding up order (if the debt is not disputed), adjourn proceedings (for example if a deal is being finalised), or dismiss the petition (if the debt has been paid or successfully challenged).
If a Winding Up Order Is Made
If a winding up order is made, the company will be placed into compulsory liquidation immediately, and control will be handed over to the Official Receiver. Directors will no longer have authority over the business.
Consequences of a Winding Up Petition
Frozen Bank Accounts
Most banks monitor The Gazette and will automatically freeze your company’s bank accounts once a petition is advertised. This can instantly halt your ability to pay wages, suppliers, and other critical bills - even before the court makes a final decision.
Business Disruption
With no access to funds, operations often grind to a halt. Even if you’re trying to dispute the debt or negotiate a settlement, the business may be left paralysed in the meantime.
Reputational Damage
The Gazette is public. Customers, suppliers, and employees may become aware of your situation quickly, triggering cancellations, demands for immediate payment, or even refusal to trade.
Legal and Financial Restrictions
From the date the petition is issued, the company cannot dispose of assets without court permission. This includes selling property, transferring shares, or even making some payments. If directors breach these restrictions, they may be held personally liable.
Investigation into Director Conduct
If a winding up order is made, the Official Receiver will investigate the actions of directors leading up to insolvency. This includes scrutinising whether you traded while knowingly insolvent, any preference or undervalue transactions, and your overall conduct in managing the company’s affairs.
Directors’ Responsibilities
Once a winding up petition is served, directors must act in the best interests of creditors, not the company. Continuing to trade while insolvent could expose directors to personal liability for company debts or claims of wrongful trading.
Therefore, it’s vital to avoid preferential payments to certain creditors, preserve company assets and records, and seek professional advice immediately to avoid breaching legal duties.
How You Should Respond to a Winding Up Petition
If your company receives a winding up petition, it’s critical to respond correctly and urgently. Here’s how to take back control:
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Seek Immediate Professional Advice
This isn’t the time to ‘wait and see’. The earlier you speak to a licensed insolvency practitioner, the more options you’ll have. We can assess your situation quickly, help you understand your risks, and outline the most practical next steps.
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Review the Petition for Validity
Errors in the petition - such as incorrect debt amounts or improper service - could be grounds for having it dismissed. If the debt is genuinely in dispute, legal action to challenge the petition may be possible. However, it’s important to remember that disputing a winding up petition is a complex process. You’ll need evidence, a legal strategy, and usually the support of an IP or solicitor.
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Negotiate with the Creditor
If the debt is undisputed but you can pay or propose a realistic plan, it’s often possible to persuade the creditor to withdraw the petition voluntarily, agree a repayment schedule, or delay advertisement while you resolve the matter. Any agreements must be made in writing and handled swiftly, ideally before the Gazette advert - which is why it’s so important to seek advice quickly.
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Apply for an Injunction (if needed)
If you’ve paid or settled the debt and the petition is still scheduled for advertisement, you may need to apply for a court injunction to stop publication. This protects your bank accounts and avoids further reputational harm. However, injunctions are technical and time-sensitive - so you’ll definitely need specialist support.
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Explore Rescue and Restructuring Options
Even though a winding up petition is scary, it’s important to remember that all is not lost. With expert guidance, there may still be a path to recovery:
- A company voluntary arrangement (CVA) could help you repay debts over time while continuing to trade
- A pre-pack administration could allow you to sell the business to a new entity and preserve jobs
- Refinancing or Time to Pay Arrangements with HMRC can also relieve immediate pressure
We can guide you through these options, assess viability, and act as a buffer between you and your creditors. Learn more about business rescue and recovery here.
Why Working with a Licensed Insolvency Practitioner Matters
Facing a winding up petition is overwhelming - but you're not alone. A licensed insolvency practitioner can be a lifeline at this critical time.
Here’s how we help:
- Independent assessment: We’ll review your situation, identify your options, and explain the best route forward.
- Negotiation support: We can liaise with creditors on your behalf to explore repayment or settlement options.
- Legal expertise: We’ll help you respond correctly to court deadlines and protect your position as a director.
- Business rescue: If your company is viable, we can explore turnaround strategies such as CVAs, Time to Pay Arrangements with HMRC, or refinancing options.
Don’t Wait Until It’s Too Late - Get Real Support from McAlister & Co Today
We understand the pressure you're under. At McAlister & Co, we specialise in helping businesses navigate the winding up petition process with empathy, expertise, and a focus on practical solutions. Whether you need urgent advice on a petition, want to protect your company from compulsory liquidation, or are looking to turn your business around, we’re here to help.
A winding up petition can spiral quickly. But with the right support, there may still be options to save your business. Don’t let fear or uncertainty stop you from acting - contact McAlister & Co today for confidential, expert advice about the winding up petition process. Let’s take the first step toward resolving your financial challenges - together.