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Winding up petitions

Duncan Lewis Litigation Solicitors – Winding up petitions


A winding up petition (WUP) is used by HMRC ,as well as individuals and companies, when a limited company is unable to repay debts.


A creditor can apply to the court to wind up a company under the Insolvency Act 1986 if the company owes more than £750.


This stage of the debt recovery process is usually a last resort in cases where a company has repeatedly failed to pay monies owed, or will not respond to correspondence, or there has perhaps been a history of cheques for payment returned by the bank.


In order to be granted a winding up petition, the creditor has to prove to the court that a company is unable to repay its debts.


Winding up petitions can be a swift solution to an ongoing debt recovery process where a creditor is suffering financially as a result of not being paid, including:


  • Where a company is using debt as an unsecured credit facility
  • Where a company is paying debts to other creditors
  • Where a company is trading while insolvent
  • Where a company is transferring assets to a new company to avoid repaying debt.


In such cases, a creditor may be accruing interest on a bank account as a result of not being paid and incurring financial loss or hardship itself.


Duncan Lewis civil litigation solicitors have considerable expertise in debt recovery solutions, including advising on winding up petitions in cases where a company persistently fails to repay monies owed to a creditor.


A winding up petition should only be used in cases where a company is likely to be insolvent, however – once the winding up petition has been granted, there are serious consequences for the debt, including the freezing of assets and a block on the company being able to trade, or transfer or sell any of its assets without a court order.


In many cases, as soon as a company is presented with a winding up petition, it will take legal action for the petition to be withdrawn to enable it to carry on trading – and it is highly likely that in this eventuality the debt will be paid because the company will have to prove that it is not insolvent to avoid compulsory liquidation as a result of the WUP.


Duncan Lewis civil litigation solicitors are also able to advise companies facing compulsory liquidation on how to defend a winding up petition.


For expert legal advice on debt recovery and Winding Up Petitions, call Duncan Lewis Civil Litigation Solicitors on 0333 772 0409.


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