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Can a winding up petition be withdrawn?

Written by Robert Moore Marketing Manager 4 October 2021


A winding up petition is a legal notice put forward to the court by a creditor who is owed more than £10,000 and has not been paid for more than 21 days. In essence, the creditor is informing the court that the company is insolvent and is asking to have it put into compulsory liquidation.

Of course, when such a notice is received, the company will do all it can to repay the creditor or mitigate the damage of the petition by claiming that it is not insolvent or it can be rescued.

Therefore, there are situations in which the debt can be withdrawn…how?

If the debt can be repaid, the winding up petition can be withdrawn, removing any further threat of liquidation.

  1. The creditor must obtain written permission from an officer of the company they have served the notice against, to settle the debt out of court. In this written permission letter should be the creditors intention to withdraw the petition if the debt is paid.
  2. A settlement should be agreed between the debtor and creditor.
  3. Once the payment has been received, the creditor should notify the debtor in writing that the payment has settled the debt and that they intend to withdraw the petition.
  4. The debtor applies to the court for permission to withdraw the winding up petition. Note: It must be at least five days in advance of the petition hearing and the petition must not yet be advertised. Proof will be needed to support your application, to demonstrate that the petition has not yet been advertised, that there has been a settlement and there is intent to withdraw.
  5. Once the court has given its permission for the petition to be withdrawn, a letter should be sent to the court. This letter should also be copied to all involved parties (debtor, creditor, court) as proof that the winding up petition has been withdrawn.

Are there any other cases when a petition can be withdrawn?

Yes. The winding up petition can also be withdrawn if the creditor decides that it is no longer worth it to continue with the process. This can be done to avoid the creditor paying the full cost of the winding up proceedings, if it is looking unlikely that the company can actually pay.

What happens if the winding up petition isn’t withdrawn?

It can be adjourned

So long that there is good reason for it, the court can adjourn winding up proceedings. Usually it is on the grounds that the company can convince the court that it can pay the debt and continue to trade. Adjourning the petition simply means giving the company breathing space it needs to collect monies owed and figure out how it will go about throwing itself into an insolvency procedure.

It can be disputed

The petition can be dismissed by the court if there is proof that it is invalid, following the company disputing its accuracy.  When this occurs, the court orders hefty costs against the petitioning creditor.

It can be dismissed via a CVA

If the court decide that the company can repay some of, or all of, the debt through a company voluntary arrangement (CVA), then the petition can be dismissed. A CVA creates a payment plan to pay back the debt to the creditors over a period of between 3-5 years.  For more information on this process please look read our guide

It can simply be paid

When a company pays the funds required, the petition can be dismissed by court and removed from the court record. Being removed from the court record prevents the petition being taken over by another creditor.  if another creditor replaced the original creditor who issued the petition, the payment to the original creditor would need to be repaid to the liquidator, to avoid preferential payments from the petitioning creditor becoming more beneficial compared to all remaining creditors.

If none of these actions are taken, within eight to ten weeks, the court will grant a winding up order and the company is placed into compulsory liquidation with the official receiver distributing any remaining assets to creditors.

For further guidance and expert advice contact us today on 0800 970 0539.

Category: Winding up petition

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