In limited circumstances, it is possible to apply to the court to rescind a winding up order after it has been made. Rescission is a formal application asking the court to reverse the order and restore the company to its previous position.
It is important to understand that rescission is not the same as dismissing a petition before the hearing. Once a winding up order has been made, the company enters compulsory liquidation and control passes to the Official Receiver or an appointed liquidator. The legal position becomes significantly more serious at that point. Rescission is therefore an exceptional remedy and the court will approach it cautiously.
At a glance
- Rescission applies only after a winding up order has been made.
- It is a discretionary remedy and not automatically granted.
- Speed is critical. Delay reduces the prospect of success.
- Strong evidence is required to justify reversing the order.
Who can apply for rescission?
An application is usually made by the company, acting through its directors. Even though directors lose management powers once the order is made, they retain standing to bring the application on the company’s behalf.
In some cases, a creditor or contributory may also seek rescission if they can demonstrate a sufficient interest. However, whoever makes the application must satisfy the court that there is a proper legal basis for revisiting the order. The court will expect detailed evidence addressing the company’s financial position and the potential impact on creditors.
When will the court consider rescission?
The court has discretion to rescind a winding up order where it is satisfied that justice requires it. That discretion is exercised carefully.
Rescission may be appropriate where the petition debt has been paid in full shortly after the order was made, where there was a procedural defect in the making of the order, or where there is compelling new evidence that undermines the foundation of the petition. The court will also consider whether other creditors would be prejudiced if the order were reversed.
The application is not simply about the position between the company and the petitioning creditor. Once a winding up order is made, the interests of all creditors become relevant.
Why speed matters
Time is a critical factor. Once a winding up order has been made, the liquidation process begins immediately. The Official Receiver may contact creditors, secure assets and begin preliminary investigations.
The longer liquidation continues, the more difficult rescission becomes. Third party rights may arise and reversing the process becomes increasingly complex. An application should therefore be made as soon as possible after the order is made.
You can read more about the consequences of a winding up order in our guide on what happens after a winding up order.
What does the court look at?
A rescission application must be supported by detailed witness evidence. The court will expect to see clear information about the company’s solvency, the status of the petition debt and any wider creditor position.
The court’s focus will be on whether it is just and equitable to discharge the order. If the company remains insolvent, or if rescission would unfairly prejudice other creditors, the court is unlikely to grant the application.
How is rescission different from dismissal?
Dismissal takes place before a winding up order is made. It occurs where a petition is withdrawn, struck out or dismissed at the hearing.
Rescission applies only after the order has already been made. It is therefore a more complex and serious application.
If the petition has not yet been heard, the appropriate course is usually to defend the petition rather than seek rescission.
What happens if rescission is refused?
If the court refuses rescission, the company remains in compulsory liquidation and the liquidator will continue to realise assets and investigate the company’s affairs.
Directors may still face potential personal exposure, including misfeasance claims or director disqualification proceedings, depending on the circumstances. For that reason, it is important to assess carefully whether rescission is realistic before making the application.
Speak to our team
If a winding up order has been made and you believe there are grounds to challenge it, urgent advice should be sought.
We can assess whether rescission is viable in your circumstances and advise on the safest course under the law of England and Wales.
