The quick answer
A Winding Up petition means that someone you owe money to, which is not usually disputed, has asked the Court to wind your company up and put it into Compulsory Liquidation. A winding up petition is very serious if you can not pay off the debt.
You should contact a Licensed Insolvency practitioner like us or speak to your solicitor. Do not delay.
In more detail
The biggest surprise about a winding up petition is that it will be advertised at least seven days before the Court hearing in the London Gazette. It is therefore public knowledge and your bank will see it (they read every advert) and will freeze your bank account before the Court hearing. In fact, under a winding up order the law says that all dispositions are void. What this means is that all transactions between the winding up petition being issued to you and the date of liquidation are void. So for example, any assets you have sold or payments made to suppliers will be cancelled.
If no action is taken it is likely that you will be put into Liquidation at the Court hearing and a Liquidator appointed over your company. The Liquidator will stop your company from trading, lay off all of your staff and sell the company’s assets to repay your creditors.
You might conclude that you are insolvent and want to go into Liquidation anyway, but there is a better process to do this called a Creditors Voluntary Liquidation and is where you choose the liquidator first.
In certain cases, if you attend the Court hearing in person the judge may allow an adjournment. Typically this would only be granted if you think you can raise the money in the near future. Be careful though that another creditor does not take over the winding up process – as they are allowed to do this even if you have paid off the creditor who started the original winding up order. This is called a Change of Carriage of Petition.
It may also be worth considering asking for a validation order from the Court – this means you can keep using your bank account before the hearing.
A Word Of Advice
If you think the winding up petition is wrong, should be disputed or you want to try and save your business, then you need to get professional help from a solicitor or Licensed Insolvency Practitioner like us as soon as possible.