Winding up petitions can be dismissed if the debt is subject to a genuine dispute or there is a counterclaim by the debtor against the petitioner. Our team deals with these types of situations very regularly - for both petitioners and companies on the receiving end. Whatever your position - it is vital to take the right action. Let us help.
Defending a winding up petition
It is possible to defend a winding up petition on a number of different grounds. For example,
- The winding up petition may be genuinely subject to a dispute. If this is the case, the petition should be dismissed from court and the creditor should commence proceedings in the right court namely the county court or the high court;
- The winding up petition may have a procedural defect. For example, mistakes may have been made in the body of the winding up petition document or there may be defective service of the winding up petition or defective advertisement of the winding up petition in the London Gazette;
- The winding up petition may be an abuse of process and being used to “bully a debtor” into payment. In those circumstances, the petition can be dismissed by way of an application to the court.
Applying for an injunction
A respondent to a winding up petition may also make an application for an injunction to help it avoid the worst effects of a winding up petition.
An injunction is a type of court order which prohibits a creditor from advertising the petition in the London Gazette. It is the process of advertising the winding up petition in the London Gazette which often leads to the failure of the debtor company. This is because
- the company bank account will be frozen by the bank and the debtor company cannot make payments out of the bank account;
- other creditors of the company also become aware of the existence of the winding up petition and can support the winding up petition;
- suppliers will refuse to supply unless it is cash on delivery;
- the sheer weight of numbers can then lead to difficulties by the debtor company which without the necessary validation order from court in order to continue trading will spell the end of the life of the company.
At Francis Wilks & Jones, we have great experience in helping companies defend winding up petitions. Expert urgent action is often required and our team is here to help.