How can I stop a compulsory liquidation?

Can an order for compulsory liquidation be halted?If a winding up petition has been issued by a creditor, you have seven days to stop the compulsory liquidation process from the date of the winding up order.

This is a serious matter as it could lead to your company being forced into compulsory liquidation. If a winding up order is granted by the court, your company’s assets will be sold to pay off your creditors.

This can be a devastating outcome for your business and could result in the loss of jobs and reputational damage. However, there is a small window of opportunity to stop the compulsory liquidation process.

Once a winding up order has been granted, you have seven days to stop the compulsory liquidation process. This means that you must act quickly to resolve the debt owed to the creditor who issued the winding up petition.

Can an order for compulsory liquidation be halted?

Yes, an order for compulsory winding up can be halted, but only under certain circumstances and within a limited time frame. Once a winding up order has been granted, you have seven days to apply to the court to have the order stayed or cancelled. This is known as an application to rescind the winding up order.

In order to succeed in such an application, you will need to show that there is a good reason why the winding up order should not have been granted in the first place, or that there has been a significant change in circumstances that justifies the cancellation of the order. The court will consider a range of factors, such as the interests of your company’s creditors, the reasons for the debt, and your company’s ability to pay the debt.

It is important to seek professional advice from a licensed insolvency practitioner if you are considering making an application to rescind a winding up order, as the process can be complex and time-sensitive.

Ways to stop compulsory liquidation

Despite the limited timeframe of seven days to stop compulsory liquidation, there are still various options available to explore. However, time is of the essence and it cannot be emphasized enough how crucial it is to act swiftly.

One of the key elements in this process is the publication of a notice in the Gazette, which notifies other creditors that a winding-up petition has been filed against your company.

Once this information reaches the bank, they may freeze your company’s accounts, making it difficult to conduct normal business activities and restricting the available options.

Pay the debt

If you are facing the threat of compulsory liquidation, there are still options available to save your business. If you can raise enough funds to pay off the debt in full or negotiate with your creditors for a payment plan, you can halt the liquidation process. In order to secure alternative finance, you can explore options such as invoice factoring or invoice discounting, which are commonly used by companies in serious debt.

Another option is asset-based finance, which allows you to leverage valuable assets to raise funds. The beauty of alternative finance is that your company’s credit rating is typically not a factor in the application process, making it a worthwhile consideration to explore.

Seeking professional advice is important to ensure that you understand the likelihood of being accepted for alternative finance and to identify the most suitable form of finance for your business. By exploring these options, you not only escape serious debt, but also lay the foundation for rebuilding your business.

Company Voluntary Arrangement (CVA)

A company voluntary arrangement (CVA) may be a viable option to protect your business from winding-up. This official insolvency process is a legally binding arrangement between you and your creditors and allows you to negotiate new repayment terms with the help of a licensed insolvency practitioner.

If 75% of creditors (by debt value) agree to the new repayment terms, you can prevent compulsory liquidation and work towards restoring your financial health. One of the significant benefits of a CVA is that once the arrangement is in place, you regain control of the company as a director.

This can provide you with peace of mind and the opportunity to rebuild the business in a sustainable and profitable manner. Seeking the advice of a licensed insolvency practitioner is crucial to determine if a CVA is the best option for your business and to ensure that the arrangement is negotiated in a way that is beneficial for all parties involved.

Company administration

Company administration can offer a way to protect your business. During a ‘moratorium’ period of eight weeks, appointed insolvency practitioners can determine the best exit strategy, without the constant pressure from creditors. This provides your business with breathing room and allows for more informed decision-making to occur.

There are several options available when exiting administration, including business rescue options such as alternative finance. A Company Voluntary Arrangement may also be a viable option to consider. However, if rescuing the business is not feasible, a Creditors’ Voluntary Liquidation may be the best course of action. By entering company administration, you can safeguard your business and explore all possible exit routes with the support of licensed insolvency practitioners.

Creditors’ Voluntary Liquidation (CVL)

While your business is still being liquidated in a Voluntary Creditors Liquidation, the voluntary aspect of the process is noteworthy. By placing the interests of creditors first, the likelihood of wrongful trading allegations against you and other directors is minimized. This can offer you and your fellow directors some peace of mind during a challenging time.

Moreover, Creditors’ Voluntary Liquidation provides additional benefits. For instance, it could open up the possibility of claiming director redundancy. This can be an important source of funds to help pay for the procedure itself or reduce some of the company’s debts.

This means that you could potentially receive a payout as an employee in the company, in addition to any assets that are sold during the liquidation process.

Dispute the debt

If you’re considering disputing the debt, it’s important to note that you’ll need strong evidence to support your case. Without sufficient evidence, your actions may be viewed as an abuse of court proceedings or may lead to legal complications.

Once a winding up order has been issues, the following action often involve in-depth investigations into the actions of company directors leading up to the insolvency, to identify any misconduct or fraudulent activity. As licensed insolvency practitioners, we can offer expert advice on preventing the compulsory liquidation of your company, and on the steps you can take to protect your business interests.

Our partner-led team of licensed IPs are available to assist you, with offices located throughout the UK. We offer a same-day consultation free-of-charge to ensure that any necessary actions are taken promptly and efficiently, so don’t hesitate to get in touch for more information and assistance.


Stopping a compulsory liquidation can be a challenging and time-sensitive process, but there are several options available to you. If you’re able to pay the debt in full or negotiate with your creditor for payment in instalments, this can prevent the liquidation process from moving forward. Alternative finance options, such as invoice factoring, invoice discounting, or asset-based finance, may also be suitable for companies in serious debt.

Additionally, a Company Voluntary Arrangement or entering into company administration can provide legal protection and allow you to negotiate with your creditors to prevent liquidation. It’s crucial to seek professional advice as soon as possible, as the time window to take action is typically short if you want to stop a compulsory liquidation.

Steve Jones Profile
Insolvency & Restructuring Expert at Business Insolvency Helpline

With over three decades of experience in the business and turnaround sector, Steve Jones is one of the founders of Business Insolvency Helpline. With specialist knowledge of Insolvency, Liquidations, Administration, Pre-packs, CVA, MVL, Restructuring Advice and Company investment.