Late payments and bad debts can put real pressure on your business. If informal approaches haven’t worked, a winding up petition may be an option where a company is unable to pay its debts. It is a serious insolvency procedure rather than simply another method of debt recovery.
In this guide, we explain how the process works, the risks involved and what to consider before taking action. If you would prefer expert help, our specialist commercial debt recovery solicitors can handle the process for you.
Contents:
- What are the grounds for presenting a winding up petition?
- Who can present a winding up petition?
- How to wind up a company
- How much does it cost to do a winding up petition?
- How long does a winding up petition take?
- Defending a winding up petition
- On what grounds can you defend a winding up petition?
- What are the consequences of a winding up petition?
- What are the consequences of a winding up petition for directors?
- How can we help?
What are the grounds for presenting a winding up petition?
You need to establish that the company is unable to pay its debts. In practical terms, you will need evidence that the company cannot pay what it owes. This may be because it is unable to pay its debts when they fall due, for example where a debt is due and unpaid, or because its liabilities are greater than the value of its assets, taking account of liabilities that may arise in the future.
A statutory demand is one way of establishing that a company is unable to pay its debts, but it is not required before presenting a winding up petition. Where a statutory demand has been served, the company generally has 21 days to pay the debt or agree arrangements to pay it. A failure to comply with the statutory demand can provide evidence that the company is unable to pay its debts. A creditor may be able to present a petition without first serving a statutory demand if there is other evidence that the company is unable to pay its debts. This could include a court judgment or an unsuccessful enforcement process.
If another winding up petition is already pending, you should take legal advice before presenting another. A petitioner who presents a petition while another is pending does so at risk as to costs.
Who can present a winding up petition?
A creditor owed £750 or more can generally present a winding up petition if they can establish that the company is unable to pay its debts.
Sometimes others, such as the company itself or shareholders, can also use this process, although this is less common as there are other alternatives available to the company.
How to wind up a company
There is a strict process that has to be followed under the insolvency legislation. This involves drafting and filing a winding up petition in court, serving the petition correctly within the required time limits, advertising notice of the petition in The Gazette and attending a winding up hearing. It is recommended that you seek legal advice from a commercial debt recovery solicitor to avoid falling foul of any of the required processes.
How much does it cost to do a winding up petition?
The petition must be filed with the court, a fee paid and an Official Receiver’s deposit paid. At the time of publication, the court fee is £352 and the Official Receiver’s deposit is £2,600. The deposit contributes towards the costs of administering the liquidation and may be returned to the petitioner if there are sufficient assets to cover the costs of the liquidation.
The petition must also be served on the company in accordance with the insolvency rules. If you use a process server, their fees will be an additional cost.
At the time of publication, the standard 2026 price for a corporate insolvency notice submitted by a non public sector advertiser using The Gazette’s webform or template is £96.55 plus VAT.
In addition, you will need to pay legal fees, both for preparation of the petition and dealing with the court process, including attending the hearing. The amount will depend on the complexity of the case and the work required.
Some of these costs may be recoverable from the company if a winding up order is made, but recovery is not guaranteed. The court may reduce the costs awarded and, even if costs are awarded, the company may not have sufficient assets to pay them.
How long does a winding up petition take?
The time from presenting a winding up petition to the hearing will depend on the court and the circumstances of the case. It can take several weeks from presenting the petition to the winding up hearing. The process may take longer if the petition is opposed or the hearing is adjourned.
Defending a winding up petition
A company can oppose a winding up petition on valid grounds. If the court is satisfied that the petition should not succeed, it will not make a winding up order. A creditor who presents a petition without proper grounds may also face an order to pay the company’s costs.
On what grounds can you defend a winding up petition?
The courts are clear that a winding up petition should not be used where the petition debt is genuinely disputed on substantial grounds. A winding up petition should not be used as a means of determining a genuine and substantial dispute about whether money is owed. Such a dispute will ordinarily need to be resolved through the appropriate court proceedings or other dispute resolution process.
Presenting a winding up petition in these circumstances may amount to an abuse of process and could result in the petitioning creditor being ordered to pay the company’s costs. If part of the debt is disputed but at least £750 of the debt is not disputed, it may be possible in appropriate circumstances to present a petition based on the undisputed amount.
What are the consequences of a winding up petition?
Once a winding up order is made, the company will normally stop trading, although it may continue trading where this is necessary for the beneficial winding up of the company. The winding up is considered to have commenced from the date the petition was presented. This means that certain dispositions of the company’s property made after the petition is presented are generally void if a winding up order is subsequently made, unless the court orders otherwise.
The Official Receiver will generally become liquidator when the winding up order is made, unless and until an insolvency practitioner is appointed in their place. They will take control of the liquidation, including dealing with the company’s assets and investigating its affairs.
What are the consequences of a winding up petition for directors?
Once the winding up order is made, the directors lose control of the company and can no longer act for or on its behalf. The Official Receiver or another appointed liquidator takes control of the liquidation and the company’s assets.
The Official Receiver or liquidator has the company’s affairs and the conduct of its directors. This may include investigating transactions involving company money or assets and, where appropriate, bringing claims against directors to recover money or assets for the company.
The Official Receiver or liquidator must also submit a report on the conduct of the directors to the Insolvency Service within 3 months of the winding up order. The Insolvency Service will then consider whether further investigation is appropriate. If a director’s conduct is found to be unfit, this may lead to an application for a director disqualification order. A disqualification can last between 2 and 15 years, depending on the circumstances. For more information on this topic, read our director disqualification guide.
How can we help?
At Harper James, our commercial debt recovery solicitors have many years’ experience helping businesses recover debts through formal insolvency proceedings. If you’re considering a winding up petition as a last resort, we can assess your circumstances, advise on your options and, where appropriate, guide you through the process from preparing the petition to the winding up hearing.
If you would like advice about presenting a winding up petition, please get in touch with our team.
