Winding up petitions can be dismissed for a variety of reasons – the debt might be paid, it might be subject to a genuine dispute or there might be 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.
Reasons to dismiss a petition
A winding up petition can always be dismissed from court prior to the winding up petition court date.
There are various reasons why a winding up petition dismissal is the sensible course of action to take
- if the winding up petition debt has been paid, it will stop the petition being supported by another creditor of the company. This can lead to a loss of control and ultimately the creditor might have to pay back any money received if the company is later wound up;
- it removes the petition from the public record – which will very much help the debtor company as petitions are viewed as very negative things;
- it can help unfreeze a company bank account;
- it reduces personal liability for the directors of the debtor company.
How to dismiss a winding up petition
The procedure itself is set out in the insolvency rules.
- a formal application needs to be made online to the court with the correct court fee.
there also is a requirement for a petitioner to deal with the position of the legal costs and these need to be set out clearly to the court and a letter received from the debtor company with the appropriate wording. - At Francis Wilks & Jones we can help you through this technical process and with access to the courts just down the road, is something we can do effectively and quickly.
- Equally, we often provide companies served with winding up petitions advice on how best to have the winding up petition dismissed from court. We are very familiar with all aspects of the winding up order process including winding up order dismissal.
What steps to take if you are the creditor / petitioner
If you are a petitioner (i.e. the person or company who has issued the winding up order) you can arrange for the winding up petition to be withdrawn prior to the actual winding up petition hearing date. Normally this would happen when the winding up petition debt has been paid by the debtor.
In order to have the winding up petition withdrawn;
- a formal application needs to be made on-line to the court; and
- the court needs to have confirmation from the debtor company that the issue of legal costs has also been dealt with.
It is important if you have been paid the winding up petition debt to ensure that the winding up petition is withdrawn as soon as possible. This will stop another creditor “supporting” the winding up order. This can then stop you from an early withdrawal of the winding up order. Ultimately, if the supporting creditor then winds the company up, any money you received after the winding up petition was issued will have to be paid back to the liquidator.
Winding up petition withdrawal therefore is an important aspect that always needs to be considered.
What steps to take if you are the debtor
If you have received a winding up notice, then it is clearly very important to have the winding up petition withdrawn if at all possible.
Normally, the person or company who has issued the winding up order against you will only agree to it being withdrawn if the debt is paid. Or if it can be shown that it is subject to a genuine and substantial dispute.
If you are faced with this situation as a recipient of a winding up order, then you can contact us and we can advise you the best way to ensure that the winding up petition is withdrawn. There are always options available, such as
- negotiating a payment plan;
- seeking external finance;
- speaking to a restructuring expert;
- disputing the underlying debt.
It can be vital to get a winding up petition dismissed from court. If you are a creditor and have been paid, you don’t want the petition supported by someone else as you might have to hand the money back. As a debtor, removal of the petition can stop a bank account being frozen and prevent huge reputational damage.
It is possible to withdraw a winding up petition from the court record in the event that the winding up petition debt is paid in advance of the winding up petition court hearing. This is always our aim.
- it is often very sensible to get a petition dismissed as soon as possible as it safeguards any money paid to creditor after the winding up petition has been issued;
- it helps avoids the unfortunate position of the winding up petition being supported by another creditor of the debtor and being taken over by that creditor who in turn winds up the company;
- if this happens, any money paid to the original petitioning creditor has to be paid back to the liquidator of the company as it is deemed a preferential payment.
At Francis Wilks & Jones we can help draft the application to withdraw the winding up petition and have the winding up petition dismissed from court within 24 hours of payment being received.
We can also assist a recipient of a winding up petition to have a winding up petition dismissed from court in circumstances where the debt is disputed or the winding up petition is an abuse of process.
How close to the court hearing can the petition be withdrawn?
So long as the hearing is less than 7 business days away, it is possible to withdraw the winding up petition prior to the first hearing date.
This is done by a winding up petition withdrawal application and is something we can assist any company with. Normally it is following payment or settlement of a debt or an agreement to pay a debt and the consent of the petitioner is needed in order to secure the winding up petition withdrawal.
How to withdraw a petition prior to the court hearing
The winding up petition withdrawal application is relatively straightforward. However, we would advise you have legal assistance to help you through the withdrawal process. The application needs to be carefully drafted and there is a court fee also required for the application. It also needs to be filed using the court online portal.
- timings are an issue as it cannot be done too close to the first hearing of the winding up petition in open court;
- if a winding up petition has already been heard in court then it is not possible to withdraw it at any time other than at the next listed court hearing date.
The Court Rules in full
Rule 7.13 of the Insolvency (England and Wales) Rules 2016 which deals with the withdrawal of a winding up petition is set out below
Permission for the petitioner to withdraw – the court rules
- The court may order that the petitioner has permission to withdraw the petition on such terms as to costs as the parties may agree if at least five business days before the first hearing the petitioner, on an application without notice to any other party, satisfies the court that—
- (a) notice of the petition has not been given under rule 7.10;
- (b) no notices in support or in opposition to the petition have been received by the petitioner; and
- (c) the company consents to an order being made under this rule.
- (2) The order must contain—
- (a) identification details for the company;
- (b) the date the winding-up petition was presented;
- (c) the name and postal address of the applicant;
- (d) a statement that upon the application made without notice to any other party by the applicant named in the order the court is satisfied that notice of the petition has not been given, that no notices in support of or in opposition to the petition have been received by the petitioner and that the company consents to this order; and
- (e) an order that, with the permission of the court, the petition is withdrawn.
Our expert team of winding up petition solicitors at Francis Wilks & Jones are here to help you with your winding up petition questions. Our knowledge of winding up orders is second to none having dealt with thousands of such situations over the years. Our practical daily experience and legal expertise means that we can assist whatever the nature of your winding up petition claim.
