What to do when a winding up petition is served

When a winding up petition is served, the company has days, not weeks, to act. The bank will usually freeze the account once it learns of the petition, any payment the company makes from then on can be void if an order is made, and the hearing date is already fixed. The realistic choices are to pay or settle before the petition is advertised, oppose it on proper grounds, apply for a validation order to keep trading, or move quickly into a rescue or insolvency procedure that displaces the petition.

This page is about the first steps after service, for any company in England and Wales and whoever the petitioner is. The background to the court process is on compulsory liquidation, and the specific approach HMRC takes is on HMRC winding up petitions.

What should the directors check on the day the petition arrives?

Read the petition itself before reacting. It will show who presented it, the date it was presented, the debt relied on, the ground used to say the company cannot pay its debts and the venue and date of the hearing. Section 123 of the Insolvency Act 1986 sets out when a company is deemed unable to pay its debts. The most common routes are an unpaid statutory demand for more than £750 that the company neglected for three weeks to pay, secure or compound, and an unsatisfied judgment. A petitioner can also try to prove directly that the company cannot pay its debts as they fall due.

Then establish three dates:

The presentation date. Under section 129(2) a winding up by the court is treated as starting when the petition was presented, unless a resolution for voluntary winding up had already been passed before then (section 129(1)). Everything the company does from the presentation date is judged against that.
The service date. Rule 7.10 of the Insolvency (England and Wales) Rules 2016 says the petitioner must not gazette notice of the petition until at least seven business days after service on the company, and at least seven business days before the hearing.
The hearing date. If the company intends to oppose, rule 7.16 requires it to file a witness statement in opposition, and deliver a copy to the petitioner, no later than five business days before the hearing.

Get advice from a solicitor or a licensed insolvency practitioner straight away. GOV.UK’s guide to dealing with company debts recommends exactly that, and the timetable leaves little room for delay.

Why does the bank account freeze, and can the company keep trading?

Section 127 makes any disposition of the company’s property after the commencement of the winding up void unless the court orders otherwise. Because commencement is backdated to presentation, payments made while the petition is pending are at risk if an order is eventually made. GOV.UK’s liquidation guidance says the company’s bank account will be frozen when someone files a petition to wind it up, and that a validation order is needed to access it.

To apply, GOV.UK says the company must tell the petitioner it is applying and to which court, complete form IAA and a witness statement, and pay a £155 fee. A hearing is usually given the same day or within the next few days, and the petitioner can object. If the order is granted the company gives a copy to its bank.

Can the company simply pay the debt?

Often, yes, and it is usually the cheapest outcome if the debt is genuinely owed and the company is solvent. GOV.UK says the creditor can withdraw the petition if the company pays the debt or makes an arrangement to pay it. Three practical points apply.

Timing. Rule 7.13 lets the court give the petitioner permission to withdraw, on an application without notice made at least five business days before the first hearing, if the petition has not yet been gazetted, no notices of support or opposition have been received and the company consents. Settling inside the seven business day window before advertisement is the clean route.
Other creditors. Once the petition is advertised, any creditor who intends to appear must give notice to the petitioner by 4pm on the business day before the hearing (rule 7.14). If the petitioner then consents to withdrawal, dismissal or an adjournment, rule 7.17 allows the court to substitute another creditor who would have the right to petition. Paying one creditor does not end the case if others are unpaid.
The source of the money. A payment out of the company’s own account after presentation is itself a disposition of company property, so it carries the section 127 risk unless validated. Directors should take advice on how a settlement is funded.

How does a company dispute a petition?

If the company says it does not owe the money, or that it has a cross claim, it must say so formally. Rule 7.16 requires a witness statement in opposition stating that the company intends to oppose the making of a winding up order and the grounds. Support it with documents such as the contract and earlier correspondence raising the dispute.

A company that disputed the debt only after the petition arrived will find it harder to persuade the court than one with a clear paper trail. Where the debt came from a statutory demand, the better time to object was within 21 days of receiving the demand. GOV.UK explains that a company cannot have a statutory demand set aside in the way an individual can, but it can apply on form IAA to restrain the creditor from presenting a petition, and must do so within 21 days.

Can administration or a moratorium stop the petition?

Yes, but the routes narrow once a petition exists.

Administration. Paragraph 25 of Schedule B1 prevents the company or its directors appointing an administrator out of court while a winding up petition is pending. They can still apply to the court for an administration order under paragraph 12. Under paragraph 40(1)(a) a pending petition is dismissed when an administration order is made. If a qualifying floating charge holder appoints under paragraph 14, the petition is suspended while the company is in administration (paragraph 40(1)(b)). See administration.
Moratorium. A company subject to an outstanding winding up petition cannot obtain a Part A1 moratorium simply by filing papers (section A3). Its directors must apply to the court under section A4, and the court can only grant it if satisfied that a moratorium would achieve a better result for creditors as a whole than a winding up.
Voluntary liquidation. Directors who accept that the company cannot be saved may prefer a creditors’ voluntary liquidation. Because the petition already exists, the court can still make a winding up order, and section 129(1) only backdates commencement to a resolution passed before the petition was presented.

Whichever route is chosen, the directors’ duty to consider creditors’ interests is already engaged by this point. See the creditor duty of directors.

What happens at the hearing, and after an order?

GOV.UK says the company must attend the hearing, and that the company can be put under the control of a provisional liquidator before the hearing in some cases. If the court finds the company cannot pay its debts it makes a winding up order and the official receiver takes charge, the bank account will usually be frozen and the assets sold. The directors must cooperate with the official receiver.

If an order is made, the company can apply to cancel, or rescind, it within five working days, for example if it can pay its debts or could not attend the hearing. GOV.UK says this is done on form IAA with a witness statement of assets and debts, and the fee is £155 at the Companies Court or a district registry.

How might this play out?

Illustration only. A design firm receives a petition on a Monday from a printer owed £8,000. The petition was presented the previous Wednesday and the hearing is in five weeks.

The directors confirm the debt is owed and that the firm has £40,000 of invoices due within a fortnight but only £5,000 in the bank.
They contact the printer the same day and agree payment by instalments plus costs, with the first payment made by a director from personal funds rather than from the company account.
The printer applies under rule 7.13 to withdraw before advertising, and the company consents.
Meanwhile the bank has frozen the account. The firm applies for a validation order so it can pay wages until the petition is withdrawn.

Had the directors waited until the petition appeared in the Gazette, a second creditor could have given notice to appear and asked to be substituted, turning a settlement into a contested hearing.

What mistakes make things worse?

Carrying on using the company account after presentation as if nothing had happened.
Waiting until after advertisement to negotiate, when other creditors can join in.
Raising a dispute for the first time at the hearing, without a witness statement filed five business days before.
Assuming the directors can still appoint an administrator out of court.
Ignoring the petition because the debt is small. The insolvency tests look at the company’s position, not the size of one invoice.
Missing the five working day window to apply to rescind an order.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.