A Winding Up Petition is a creditor-driven attempt to force a firm into Compulsory Liquidation.
What is a Winding Up Petition?
A Winding Up Petition is a serious threat to a company which aims to force it into Compulsory Liquidation. It can be issued by a creditor who is owed £750 or more and results in the company ceasing to trade.
Essentially, the creditor starts a legal process in an attempt to “wind the company up” so they may recover their outstanding debt.
A Winding Up Petition is applied for via the court and usually comes after a creditor has lost faith in the company and given up on trying to claim their money back in other ways. Directors failing to keep payment promises, bouncing cheques, and unresolved county court orders or statutory demand documents might knock a creditor’s confidence.
As a result, they may threaten the company with a Winding Up Petition.
It’s a costly process for a creditor. They must pay an in-court deposit of £1530 plus filing fees and between £400 and £800 to issue the petition.
It is not a threat to be taken lightly – it is a serious attempt at legal action against a company.