If you’re facing a winding up petition, discover how the winding up petition procedure works and how McAlister & Co can help.
Receiving a winding up petition can feel like the rug has been pulled from beneath your feet. It’s one of the most serious legal actions a creditor can take and often comes as a shock, resulting in fear, confusion, and panic. But while the situation is urgent, it is not necessarily the end. With expert advice and immediate action, it may still be possible to protect your company and regain control.
At McAlister & Co, we’ve supported countless directors and business owners through this exact scenario. In this blog, we’ll walk you through the winding up petition procedure, explain what to do if you’re served with one, and show you how our experienced team can help you take the right next steps.
What is a Winding Up Petition?
A winding up petition is a legal application made by a creditor to the courts in an attempt to force your company into compulsory liquidation - meaning the business will be closed, its assets sold off, and the proceeds used to pay debts. It is typically issued after previous collection attempts have failed, such as statutory demands, payment reminders, or CCJs (County Court Judgements).
The most common creditor to issue a petition is HM Revenue & Customs (HMRC), particularly where companies have fallen behind on VAT, PAYE or Corporation Tax. However, any creditor owed £750 or more can initiate the process.
A winding up petition is part of a strict legal procedure. If not challenged or resolved quickly, it will be heard in court. If the winding up petition is successful, a winding up order will be granted, and the company will enter compulsory liquidation, which is irreversible.
The Winding Up Petition Procedure: An Overview
Understanding the winding up petition procedure is key to responding effectively. Here’s what typically happens during the winding up petition process:
- Petition Filed – A creditor files a winding up petition with the court.
- Petition Served – A sealed copy is served on the company, usually in person.
- Response Window – This is the time to act to prevent the petition from being advertised.
- Advertisement in The Gazette – On day eight, the petition can be made public. At this point, banks usually freeze the company’s accounts. Validation orders can be applied for to enable the company to keep trading in the interim.
- Court Hearing – Typically scheduled 8–10 weeks after the petition is filed. If the judge agrees that the company cannot pay its debts, a winding up order is issued.
- Compulsory Liquidation Begins – The Official Receiver (or another liquidator) takes control of the company, assets are sold, and the company is dissolved.
This is a time-sensitive process, and delays can severely limit your options. The moment you receive a petition, you are on the clock.
What to Do If You’re Served with a Winding Up Petition
If you’ve just received a petition, here’s what you should do:
1. Stay calm, but act fast
It’s natural to panic, but now is the time for clear-headed, strategic action. There are solutions available, but only if you act quickly, particularly before the petition is advertised.
2. Speak to a licensed insolvency practitioner
A licensed insolvency practitioner can assess your company’s financial position, explain your legal obligations, and help you understand your options. At McAlister & Co, we offer a free, confidential consultation to help you get clarity right away.
3. Check the validity of the petition
Is the debt accurate? Has it already been paid or disputed? Was the petition served correctly? Sometimes, errors or disputed debts can be used to apply for the petition to be dismissed. A solicitor or insolvency practitioner can guide you through this.
4. Prevent the petition being advertised
This is absolutely critical. Once the petition is advertised in The Gazette, your business bank accounts may be frozen, creditors and suppliers may be alerted, and your company’s reputation could suffer serious damage. At McAlister & Co, we are well practiced at negotiating the delay in advertising the petition, providing vital time to put a plan in place.
5. Explore repayment or negotiation
If the debt is legitimate and your business has the means to repay it, even partially, you may be able to settle it and have the petition withdrawn. If full repayment isn’t possible, creditors may still be open to negotiated repayment plans, especially if approached promptly.
6. Consider formal rescue options
If paying the debt outright isn’t realistic, an insolvency practitioner can help you explore formal solutions such as:
Company Voluntary Arrangement (CVA)
A CVA is a legally binding agreement between your company and its creditors that allows you to repay debts over a fixed period while continuing to trade. Creditors receive a better return than they would in liquidation, and once the CVA is approved (by 75% of creditors by value), all legal action, including the winding up petition, is immediately halted. It’s an ideal option for businesses that are fundamentally viable but facing short-term financial pressure.
Administration
Administration provides your business with immediate legal protection from creditor action, including any ongoing petitions. An insolvency practitioner is appointed as the administrator and takes control of the company with the goal of rescuing it, achieving a better outcome for creditors, or preparing it for sale. During this time, the business can restructure, seek new investment, or be marketed for sale as a going concern - all while trading is legally safeguarded from disruption.
Pre-Pack Administration
A pre-pack administration involves arranging the sale of the business and its assets before entering administration, with the transaction completing immediately upon appointment. This is a powerful option if your business is viable but burdened by unmanageable debt. The buyer is often the existing management team, allowing for continuity of operations, protection of jobs, and preservation of brand value. It’s fast, confidential, and can be a lifeline in situations where time is critical.
The Risks of Ignoring a Winding Up Petition
If the petition is ignored or not dealt with in time, your company will almost certainly be forced into liquidation. Your bank accounts will be frozen, operations will grind to a halt, and customers, suppliers, and employees will be impacted.
But it doesn’t end there. As a director, you have legal responsibilities once your company is insolvent. If you continue trading and worsen the position of creditors, you could be held personally liable for company debts or face director disqualification. Taking early advice protects not only your business, but also you.
Still Confused About the Winding Up Petition Procedure? Here’s How McAlister & Co Can Help
We know how stressful and disorienting it is to receive a winding up petition. That’s why at McAlister & Co, we make the process of getting support clear, calm, and confidential.
As experienced, licensed insolvency practitioners, we can:
- Assess your company’s situation quickly and clearly
- Help you challenge or respond to the petition
- Prevent the petition from being advertised
- Arrange an application for a validation order to be put forward allowing you to continue trading in the interim
- Arrange for funds to be released if you bank account has been frozen
- Negotiate with creditors on your behalf
- Guide you through CVA, administration, or other rescue options
- Support you through voluntary liquidation if closure is the best option
Our goal is always to help you avoid unnecessary liquidation, protect your company’s value, and help you take back control, without judgement and without delay.
The earlier you act, the more we can do to help. So, if your company has been served with a winding up petition, don’t wait. Call McAlister & Co today for expert, empathetic advice.