Winding-up Petition

What is a Winding-up Petition?

Winding-up petitions can be used by creditors to close businesses down when they fail to repay an owed debt. When a creditor has tried unsuccessfully to recover their debt, a winding-up petition may be their last recourse for repayment.

We can advise you on what to do if a creditor has presented a winding-up petition to court, and whether you’re in a position to defend it. But how do winding-up petitions work, and at what stage might a creditor take this action?

How do Winding-up Petitions work?

The creditor can present a winding-up petition at court if they’re owed £750 or more, but they’re expected to have made several attempts to collect the debt through the usual methods of meaningful negotiation and reminders, before taking this action.

A hearing is arranged, and seven days after the petition has been served it’s advertised in the Gazette so that other creditors are aware of what is happening. This typically leads to bank accounts being frozen and suppliers withdrawing their supplies.

At court, the petition is either dismissed, or a winding-up order granted and the liquidation process begins.

Challenging the winding-up petition

We have broad experience of helping Scottish companies that have had winding-up petitions issued against them, and can quickly determine whether a challenge is possible.

Negotiating with creditors

HMRC are known to use winding-up petitions to close down businesses that owe them money. We understand HMRC’s systems and processes, and may be able to negotiate for more time to pay.

Identifying alternative options

Alternative finance may be an option for your business, so you can pay your debts from a cash lump sum or over an extended period. Other options that can help the company survive include a Company Voluntary Arrangement (CVA) or placing the company into administration, which could both involve restructuring your company’s debts.

If you’re dealing with severe debt and believe a winding-up order is imminent, or one has already been served, you need to act quickly to avoid liquidation. Scotland Debt Solutions help Scottish businesses to deal with insolvency – we can guide you through your options and help you defend a petition where appropriate.