What can a company do if a winding up order is made?
Rescission of the winding up order
Under Rule 12.59 of the Insolvency (England and Wales) Rules 2016, a company can ask for a winding up order to be rescinded. This effectively means that the winding up order is undone. The procedure for the application to rescind the winding up order is set out at paragraph 11.7 of the Practice Direction on Insolvency Proceedings.
- The application must be brought by a creditor of the company or a contributory of the company subject to the winding up order.
- The application must be made urgently – within 5 business days of the date of the winding up order. In limited circumstances that period can be extended but there would have to be a very good reason why.
- The application for the rescission of the winding up order must be supported by detailed witness statement evidence also detailing the company’s assets and liabilities.
The type of things the court will look at include whether the applicant can show that the circumstances of the company are materially different from the circumstances that applied when the court made the winding up order.
Stay of winding up proceedings
Pursuant to Section 147 of the Insolvency Act 1986, the liquidation of a company can be halted by seeking a stay of all proceedings in the winding up. The applicants can be a creditor contributory or a liquidator of a company subject to the winding up order. It is up to the court as to whether to grant the stay of winding up proceedings but it can do where for example the company is solvent or it is satisfied that it is in the public interest for a stay to be granted. It may also be stayed where the courts believe that another jurisdiction is better placed to deal with the proceedings.
The company may appeal a winding up order made against it pursuant to Civil Procedure Rule 52.11. However, this remedy is limited and can only take place on the basis that the decision was either wrong or unjust because of serious procedural or other irregularities.
There are different procedures to be followed depending on where the winding up order was made:
- Where the winding up order was made by the Registrar of the Companies Court, appeals must be made to the Judge of the High Court (Insolvency (Amendment ) (No.2) Rules 2016).
- Where the winding up order was made by a Judge or District Judge in the County Court, the appeal is to a Judge in the High Court (Insolvency (Amendment ) (No.2) Rules 2016).
- Where the winding up order was made by a Judge in the High Court, the appeal must be made to the Civil Division of the Court of Appeal.
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