Written by Jeremy Boyle
Last Updated: 4 November, 2025When a company falls behind on its debts, few events are more serious than a winding-up petition. It signals that a creditor has lost confidence in being paid and is asking the court to close the company down.
In this guide, we explain what a winding-up order is, how the process works, and what options exist to stop it.
- What is a winding-up petition?
- The purpose of winding up petitions
- The consequences of a winding-up order
- Real-life examples of winding up orders
- Who can make a winding-up petition?
- How to issue a winding-up petition?
- How long does the winding-up process take?
- How to stop a winding-up petition?
- HMRC winding up petitions
- Winding up orders and the liquidation process
- Can a winding-up order be stopped after it is granted?
- Winding up petition costs
- Protecting directors from personal liability
- FAQ’s on winding up orders
- Contact our winding up petition solicitors today
What is a winding-up petition?
A winding-up petition is a formal application to the High Court to close a company that cannot pay its debts. If successful, the court makes a winding-up order and places the business into compulsory liquidation.
This is one of the most serious insolvency actions a company can face. Once presented, the company’s bank accounts may be frozen, its reputation can suffer immediate harm, and trading becomes difficult.
What you need to know about winding up petitions
- A winding-up petition is usually brought by a creditor owed £750 or more who can prove that the company cannot pay its debts
- The creditor might be a supplier, a lender, or HMRC (which remains one of the largest petitioners in the UK)
- After the creditor serves the petition on the defaulting company, the creditor can advertise it in The Gazette. The petition must be advertised not less than seven business days after service and not less than seven business days before the hearing, unless the court orders otherwise
- Once the petition becomes public, it can quickly impact the company’s ability to operate or refinance
- If the petition is granted, the court makes a winding up order (also called a company winding-up order or compulsory winding-up order).
The purpose of winding up petitions
A winding-up petition is designed to protect creditors and uphold confidence in the commercial system. It provides a legal route to close a company that cannot, or will not, pay its debts.
In most cases, the purpose is not simply to punish the debtor company, but to bring matters to a head. A petition forces a clear outcome – either the debt is paid, a corporate restructuring solution is reached, or the company is placed into liquidation.
As such, creditors often use the winding up process as a last resort after other recovery methods have failed, such as issuing a statutory demand or obtaining a county court judgment.
The consequences of a winding-up order
- Frozen bank accounts: Banks typically freeze accounts once a petition is advertised or they are otherwise notified, which can make trading extremely difficult.
- Damage to reputation: The petition’s advertisement in The Gazette alerts suppliers, customers and lenders, often leading to loss of confidence.
- Clawback risk: Once a winding up petition has been presented, the company must be very careful about how it handles money or assets. If the court later makes a winding up order, any payments or transfers made after the petition was filed can be cancelled, unless the court has approved them in advance.
- Director investigations: If the petition is successful, and a court order to wind-up a company is made, directors’ conduct will be investigated for potential wrongful trading or breach of fiduciary duty.
Real-life examples of winding up orders
Real-world cases provide valuable insight into the process of winding-up petitions and their impact on various types of businesses.
Reading Football Club (2023-2025)
In 2023, Reading FC faced a winding-up petition over unpaid tax debts reportedly owed to HMRC. The club managed to settle the debt shortly before the hearing, avoiding a winding-up order. However, that wasn’t the end of the club’s troubles. In early 2025, football agency Skelland Brown also lodged a petition, although it was also withdrawn.
Liberty Steel (2025)
In May 2025, Yorkshire-based Speciality Steel UK (SSUK), part of the Liberty Steel Group, received a reprieve when a winding-up petition over unpaid debt was adjourned, allowing time for the company’s sale to proceed.
However, the pause was short-lived as in August, the High Court placed the company into compulsory liquidation. To save jobs, the government arranged special managers to keep operations running while seeking a sale.
Lycamobile (2024)
In August 2024, telecoms company Lycamobile was issued with a winding-up petition by HMRC amid a long-running VAT dispute. The petition was later withdrawn, despite the underlying tax liabilities still being in dispute. In late 2024 and early 2025, the company cut around 90% of its UK workforce.
British Home Stores (2016)
BHS was a fixture on the high street for decades. However, following years of financial difficulties, the company was controversially sold for just £1. After its subsequent collapse, BHS was wound up in 2016.
The Insolvency Service later brought legal action against former directors, with the court finding them liable for wrongful trading and misfeasance in 2024.
Who can make a winding-up petition?
Any creditor owed money by a company can apply to the court to have it wound up, provided certain legal conditions are met. To issue a winding up petition, the creditor must be owed at least £750 and be able to prove that the company is unable to pay its debts.
The most frequent petitioners include:
- Trade creditors
- HMRC
- Banks and financial institutions
- Landlords
If a shareholder believes that a company is being mismanaged, they may make a ‘just and equitable winding-up petition’. These are used in limited circumstances, for example, when there is a 50/50 deadlock. The court might propose other remedies to save the company from liquidation.
How to issue a winding-up petition?
If you are a creditor considering a petition for the winding up of a company, it is essential to follow the correct steps. The process is highly technical, and even a minor procedural error can delay or invalidate the application.
Below is a quick overview of how the winding up petition procedure works:
- Confirm eligibility: The company must owe at least £750 and be demonstrably unable to pay its debts. This is usually established through an unpaid statutory demand or county court judgment. You can serve a statutory demand to support your petition.
- Prepare the petition: The petition must include full details of the debt, evidence of how it arose, and confirmation that all procedural rules have been met.
- File the petition at court: The creditor submits the petition to the High Court (or relevant District Registry) and pays the applicable fees.
- Serve the petition: The petition must be formally served on the company’s registered office, following the strict rules of service under the Insolvency (England and Wales) Rules 2016.
- Advertise the petition: If the debt remains unpaid after seven days, the petition is advertised in The Gazette. This notifies other creditors who may wish to support or oppose it.
- Attend the court hearing: The court will review the evidence and decide whether to make a company winding-up order.
Because the process is technical and time-sensitive, creditors should seek early guidance from insolvency solicitors. Professional advice ensures the petition is correctly drafted, properly served, and procedurally sound.
How long does the winding-up process take?
- Service of petition (Day 0): The petition is formally served on the company’s registered office.
- Seven-day waiting period: The company has seven days to pay the debt, dispute the claim, or take alternative steps.
- Advertisement in The Gazette: After seven days, the petition may be advertised.
- Court hearing (8–10 weeks): The hearing is usually held around eight to ten weeks after the petition is served.
- Liquidation phase: If the court grants the compulsory winding up order, the company enters compulsory liquidation. The Official Receiver or appointed liquidator will then begin to sell assets and distribute funds to creditors, a process that often takes a year or more.
How to stop a winding-up petition?
- Paying the debt in full: The simplest way to stop proceedings, and best done before the petition is advertised.
- Negotiating a payment plan: Creditors may accept staged payments or agree to a CVA if they believe the business is viable.
- Applying to court for an adjournment: This can buy time to explore administration or refinancing.
- Disputing the debt: If the amount is incorrect or the debt is disputed, you can apply to have the petition dismissed.
- Seeking an injunction: In the event of a dispute or procedural error, the court may prevent the petition from being advertised.
- Applying for a validation order: You might be able to apply for a court order to allow specific transactions or continued trading while the petition is pending.
HMRC winding up petitions
HMRC winding-up petitions account for the majority of all petitions in England and Wales. HMRC often takes this step where tax debts remain unpaid after repeated requests and enforcement attempts.
While HMRC is required to act fairly and proportionately, it is known to move swiftly once payment deadlines are missed. HMRC will typically issue a statutory demand first, but in urgent cases can proceed directly to a winding-up petition.
If your business receives a winding-up petition from HMRC, it is critical to act immediately. There may still be scope to negotiate a Time to Pay arrangement or reach a settlement before the hearing.
Winding up orders and the liquidation process
- Trading stops: The company must cease all business operations.
- Control passes to the Official Receiver: The Official Receiver (or later, a licensed insolvency practitioner) takes over as liquidator and assumes responsibility for the company’s affairs.
- Employees are usually dismissed: Staff contracts are typically terminated by the Official Receiver or later liquidator (who will provide information about any claims, including through the Redundancy Payments Service).
- Assets are realised: The liquidator will identify, collect, and sell company assets to repay creditors in accordance with insolvency law.
Can a winding-up order be stopped after it is granted?
- A company may appeal the decision if it believes the order was made in error. An appeal must be lodged quickly, usually within five business days of the order
- The company, its directors, or other interested parties can apply to have the order rescinded if new evidence comes to light that would have changed the court’s decision
- In some cases, the court can temporarily stay (pause) the liquidation, for example, if there is a realistic prospect of settlement or a restructuring proposal in progress.
Winding up petition costs
Issuing a winding-up petition is expensive, which is why smaller creditors rarely do it unless the debt is substantial.
At the time of writing, typical winding-up petition costs include:
- Court fee: £343
- Petition deposit (to cover liquidation costs): £2,600
- Solicitor’s fees: variable, depending on complexity
You can keep up to date with the latest costs on the government website.
Creditors can sometimes recover these costs if the company pays the debt before the hearing or if assets are later realised in liquidation. However, pursuing a petition carries risk: trade creditors often receive only a small percentage of what they are owed, if anything, once liquidation is complete.
Protecting directors from personal liability
When a company faces a winding-up order, directors often worry about being held personally liable for the company’s debts. While directors have a degree of protection, that can be lost if the court or liquidator finds evidence of misconduct, negligence, or wrongful trading.
To reduce personal risk, directors should act quickly and carefully. Key steps include:
- Avoiding preferential payments: Do not repay certain creditors, or yourself, ahead of others. Favouring one creditor can later be challenged by a liquidator for preferential payments.
- Stop trading if the company is insolvent: Continuing to trade when you know the business cannot meet its debts may result in a wrongful trading claim and personal liability for losses.
- Keeping accurate records: Maintain up-to-date accounting records, board minutes, and financial statements. Missing or inaccurate information can be treated as evidence of misconduct.
- Being transparent with the liquidator: Co-operate fully, provide requested documents promptly, and avoid any actions that could be seen as concealing company assets.
Engaging experienced insolvency solicitors at the first sign of financial distress can help you understand your duties, avoid missteps, and protect your position.
FAQ’s on winding up orders
A winding-up petition is the application made to the court asking for a company to be closed because it cannot pay its debts. It is the start of the process. A winding-up order is the court’s decision at the end of that process. If the judge is satisfied that the company is insolvent, the court grants the winding-up order, placing the company into compulsory liquidation.
A winding-up order is a court order to wind up a company that cannot pay its debts. Once made, the company enters compulsory liquidation and an Official Receiver takes control.
From service to hearing, the winding-up process typically takes 8–10 weeks, but can proceed more quickly in urgent cases. The subsequent liquidation can take a year or more.
Yes, a winding-up petition can be withdrawn by the petitioner if the debt is settled or an alternative arrangement (such as a CVA) is agreed before the court hearing.
Once a winding-up order is granted, the company stops trading, employees are dismissed, and a liquidator or Official Receiver sells assets to repay creditors. Directors may also be investigated for misconduct.
A winding-up petition is the most serious debt recovery action a creditor can take and can quickly lead to a company’s closure if ignored.
Contact our winding up petition solicitors today
If you are a creditor seeking to recover money, our expert winding up petition solicitors can help you assess whether issuing a winding-up petition is appropriate, prepare the paperwork, and represent you at court.
Our specialist solicitors can:
- Assess your position and objectives: Whether you are a creditor seeking to recover a debt or a company facing a petition.
- Advise on the most effective strategy: Including repayment plans, administration, or company voluntary arrangements to avoid compulsory liquidation.
- Handle all procedural requirements: From preparing and filing the petition to applying for injunctions, adjournments or validation orders and protecting your interests throughout hearings and negotiations.
- Provide ongoing support: Guiding you through every stage of the process until the matter is resolved.
For your free initial consultation, contact us today on 020 7467 3980 or complete the website enquiry form.
