How Do I get A Winding Up Petition Dismissed or Adjourned

A winding up petition being served is a serious problem for a company, especially if it has been advertised. Once advertised, the bank will freeze the account, and this can be the end of the company as suppliers, employees, and other creditors will not be paid. However, even if the petition is dismissed, the petition still has to be heard. So what happens in the event of the petition being heard by the court?

Dismissing a Winding Up Petition

The court’s role is to decide whether a winding up order should be made. A judge can decide to dismiss the petition if they believe the company is able to pay back the debt or a reasonable proportion of it, for example in a CVA or an agreement to pay back over an extended period. Other grounds for dismissal include:

• The debt is paid or a dispute is settled. The judge will require a signed agreement and sufficient evidence to prove the case, as verbal agreements cannot be enforced.
• Abuse of process by the petitioner. The court has to be satisfied that the petitioner is using the court to settle a score/dispute or to gain a commercial advantage. The court will not hear arguments for a genuinely disputed debt, as this is considered an abuse of process.
• Creditors want the company to survive. The judge can also consider the position of other creditors. In the case of Re Dollar Land (Feltham), the court decided that a winding-up order should be rescinded if there was a real prospect that CVA proposals would be approved by the company’s creditors, effectively letting the creditors’ majority decide.

Adjourning a Winding Up Petition

Adjournments can be argued by a Barrister in court to just ask for extra time to sort out the company’s affairs. Grounds for an adjournment are generally the following:

• The company is due to receive extra finance or a big debtor is due to pay shortly.
• The company has just appointed advisors to prepare a proposal to work with creditors, which could be a CVA or a time to pay scheme.

The costs of an adjournment can vary considerably, but a Barrister can provide an estimate. Having all the requisite information together quickly helps to make a strong case. It is vital to instruct a reputable solicitor or turnaround practitioner to help make your case, as a judge expects to see a clear plan of action.

Important Advice and Consequences

Ultimately, everything should be done to avoid being issued with a petition in the first place, because even if it is not valid, it can cause major headaches. A winding-up petition, even a dismissed one, is a public event that can take time for credit rating agencies to remove from their database. Therefore, the best course of action is to:

• Take advice from insolvency practitioners as soon as a petition is threatened.
• Have all the necessary evidence ready to prove your case.
• Communicate with the petitioner’s solicitor to get them to agree to withdraw the petition or support a CVA.

For advice on how to deal with winding up petitions, including how to dismiss a winding up petition, visit our winding up petition page.