With the number of winding-up petitions on the rise - according to new data, winding-up petitions were up nearly 30 per cent year-on-year in Q3 2023 - we take a look at this process of insolvency. If you’re in the market for a distressed business, this may be of interest to you.
What is a winding-up petition?
A winding-up petition, also known as compulsory liquidation, is a legal action taken by creditors against a firm that owes them money. It is by far the most stringent action a creditor can take against a business, usually coming after other debt collection methods have been attempted, and could ultimately mean the end for the company.What is a winding-up order?
If a winding-up petition is successful, it is followed by a winding-up order. This is a court order that forces an insolvent company into compulsory liquidation.How does the whole process work?
Once the winding-up petition has been issued, it will be publicly advertised, on Business Sale Report, seven days later. It will then be heard at court where it will either be dismissed or approved.Who issues winding-up petitions?
Suppliers, banks and HMRC tend to use winding-up petitions as a way of extracting debt from companies. However, issuing a winding-up petition can be expensive - a creditor would need to pay £280 in court fees and pay a £1,600 petition deposit.What happens if a winding-up petition is successful?
If a company is successfully wound up, the following will happen:Are there any other options?
Can a winding-up order be cancelled?
In some cases, yes. If a company is in the process of liquidation, it can apply to rescind the order, if it can pay its debts, say, or is unable to attend the original court hearing. An application to cancel the petition, which would cost £155 if done through the Companies Court or a district registry, must be made within five working days of receiving it.How does a winding-up petition affect a company’s directors?
If a winding-up order is approved, a liquidator, such as an insolvency practitioner, will investigate the affected company’s situation to see if there has been any fraudulent trading or wrongdoing by its directors. If evidence is found, directors could be fined and/or disqualified, and made personally liable for any debt.Does a winding-up petition definitely mean the end for a business?
While a winding-up petition is certainly very serious, it doesn’t necessarily mean the end for a business. As explained above, in some cases the result of a winding-up petition is not liquidation but administration, which can be a real opportunity for buyers of distressed businesses. Here are a few examples.Highly regarded service provider operating for over three decades with complete transparency and an ethical approach. Offers recruitment services for organisations across the region, sourcing commercial, executive, IT and selective blue collar operat...
Established in 2012, this business offers a comprehensive suite of staffing solutions, the company provides experienced in-house recruitment professionals for managing open vacancies on a fixed-term basis, catering to both UK & Europe and Australian...
Now available for acquisition is a well-established tyre supply and fitting centre catering to the needs of Midhurst and its neighbouring areas. Operating for over 34 years, this establishment specialises in the sale, repair, and replacement of tyres...
Join today to receive:
All this and much more, including the latest M&A news and exclusive resources
We can help you capitalise on insolvent businesses. We list UK businesses in administration, liquidation and with winding up petitions daily. Ensuring our members never miss out on an opportunity
Please choose your settings for this site below. For more information please read our Cookie Policy
These cookies are necessary for our website to function properly and provide you with access to all features.
These are analytics cookies that help us to improve the way our website works.
These are used to improve the functional performance of the website and make it easier for you to use.