Setting aside a winding-up petition in the UK is a recourse available to companies that believe they have been unjustly targeted for liquidation.
When a company is perceived to be insolvent and unable to meet its financial obligations, creditors might approach the court with a winding-up petition, aiming to liquidate the company’s assets.
However, if the company or its directors deem the petition to be based on inaccurate information or feel it’s unjust, they can apply to the court to have it set aside.
To achieve this, they must provide substantial evidence, either showcasing their solvency or disputing the creditor’s claim.
If their arguments hold merit, the court may dismiss the petition, allowing the company to proceed with its business operations without looming liquidation threats.
What are the grounds for setting aside a winding up petition?
The following are possible grounds for having a winding up petition set aside:
- The debt is substantially disputed
When a winding-up petition is issued by a creditor, despite a genuine significant disagreement over the debt, it’s a misuse of the court’s procedures. You have the option to pursue an injunction that stops them from making the winding-up petition public in the Gazette.
Having an advertisement in the Gazette could notify your bank about the ongoing issue, potentially leading to the freezing of your accounts. Hence, halting such an advertisement is crucial. Disagreements might stem from varying interpretations of contractual terms or perhaps dissatisfaction with the quality of products received.
- If you possess a counter-claim against the creditor
Should the petitioner be indebted to your company beyond what you owe them, it’s possible to offset this against your outstanding amount. This essentially nullifies the debt, eliminating the need for the creditor to take any further steps regarding this specific debt.
- Mistakes in procedure or technicalities
For a winding-up petition to be lawful, it must be precise and delivered appropriately. Occasionally, oversights occur, especially if the petitioner hasn’t consulted with experts.
A winding-up petition can be dispatched to the company’s official address or personally handed to a director, official, or staff member. If not given directly, it can be affixed to the entrance of the company’s main office.
Setting aside a winding up petition
- A statement from a witness must be submitted to the court in response to the winding-up petition at least five working days before the scheduled hearing. It’s also essential to forward a copy of this statement, along with any corroborating documents, to the individual or entity that filed the petition.
- Should the petition have already been served, you might have the chance to secure an injunction to stop its publication in the Gazette.
- You could also consider requesting a postponement, giving you time to contemplate company administration as a potential solution. Company administration is a formal insolvency process that offers a shield to your business from legal actions by creditors.
- If you’re of the view that your company could settle the debt with a bit more time, asking for a delay in the hearing date could be a viable strategy. This extra time could be beneficial for you to reconfigure or rearrange your business matters.
Conclusion
If you believe your company has been unjustly targeted with a winding-up petition, it’s crucial to understand that you have the right to challenge and potentially set it aside. Setting aside a winding-up petition allows businesses to contest a creditor’s claim for liquidation, especially if it’s based on inaccurate information or is deemed unjust.
Taking swift action is essential to protect your company’s reputation and financial standing. If you feel you have valid grounds to object to the winding-up petition and wish to have it set aside, don’t hesitate.
Complete our online enquiry form now, and our team of experts will guide you through the necessary steps to safeguard your business.
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.