A winding up petition is often the last chance a company director has to rescue their business. This guide explains why appointing a licensed Insolvency Practitioner now, rather than after the court hearing, gives you more options.
Is now the right time to appoint a licensed Insolvency Practitioner?
If your company has received a winding up petition, appoint a licensed Insolvency Practitioner to rescue your business.
A petition means a creditor, including HMRC, has already exhausted other routes and gone to court. From this point, the company's options narrow, and once the petition is advertised, the bank can freeze the company account without warning, regardless of whether you wish to continue trading.
Appointing a licensed Insolvency Practitioner at this stage is time-sensitive and determines whether your business can go on or must close.
Why does a petition change the timeline?
Before a petition, a director often has weeks or months to explore their options. After a petition, that changes:
- Advertisement in The Gazette usually follows shortly after a winding up petition, and this is what triggers most bank account freezes
- Once an account is frozen, payroll and supplier payments can stop immediately
- The court hearing date is fixed, this is often non-negotiable
While there are many warning signs that show a business is nearing insolvency, a winding up petition is often the last warning sign before a business is forcibly closed if no remedial action is taken. For a rundown of common warning signs before a winding up petition, read our article on when does a company need an insolvency practitioner?
How can appointing a licensed Insolvency Practitioner help?
A licensed Insolvency Practitioner assesses the winding up petition and the company's position, then sets out which options are available:
- Negotiating settlement or a payment arrangement with the creditor before the hearing, subsequently securing breathing space
- Proposing a Creditors' Voluntary Liquidation (CVL), so the company closes on its own terms
- Assessing whether a Company Voluntary Arrangement (CVA) is viable, if creditors are likely to accept a repayment plan
- Exploring administration, where a rescue or going concern sale is realistic
The options available depend on the company's position and working that out quickly is why appointing early, rather than delaying appointment, is the priority at this stage.
Does it matter who issued the petition?
Once a petition has been issued, the process itself doesn't change depending on which creditor issued it. Advertisement in The Gazette, the risk of a bank account freeze, and the fixed court hearing date all progress the same way, regardless of whether the petitioning creditor is HMRC, a landlord, or a trade supplier.
While some creditors may be more open to negotiating repayments than others, the timeline remains the same. If HMRC is the petitioning creditor, a Time to Pay arrangement may still be worth exploring, though by the time a petition has been issued, in our experience, that window has often already closed. A licensed Insolvency Practitioner can set out the options realistically available to you.
What happens if you wait after receiving a winding up petition?
If you wait after receiving a winding up petition, here's what happens at each stage, including once the petition is advertised, in the run-up to the hearing, and once a winding up order is granted.
Stage | What happens |
Petition advertised in The Gazette | The company's bank typically freezes its accounts at this point, often before a director has taken advice. Credit reference agencies also monitor Gazette notices, affecting the company's ability to access credit lines |
Any payment or asset transfer made after petition is presented | Under the Insolvency Act 1986, these transactions can later be declared void by the court if a winding up order is granted, meaning suppliers, landlords, or creditors who received payment may be ordered to repay it, regardless of whether they acted in good faith |
In the run up to the hearing | Grounds to dispute or delay a petition narrow the closer you get to the hearing date. The court expects genuine disputes to be raised early rather than in the final hour |
If a winding up order is granted | Under the Insolvency Act 1986, the Official Receiver is appointed as liquidator and takes control of the company's assets as directors' powers cease immediately |
If you progress through each stage and you’re yet to appoint a licensed Insolvency Practitioner, expect fewer routes to remain open and the consequences harder to avoid.
I have handled insolvencies where even a matter of a few weeks made a significant difference. I recall one case where a freight services company was expecting a winding up petition after being threatened by a supplier. The director took control of the matter and entered a Company Voluntary Arrangement, after most company creditors gave the green light. A realistic CVA proposal was key which helped the director avoid compulsory liquidation.
Dave Broadbent, Licensed Insolvency PractitionerFind a licensed Insolvency Practitioner now
If your company has received a winding up petition, appoint a licensed Insolvency Practitioner. Our directory matches you with a licensed Insolvency Practitioner who can assess your situation, pinpoint where you stand in the winding up petition timeline, and set out the options available to you.
When should a director seek professional advice?
For directors carrying significant tax arrears, whether that is an overdue VAT bill, a PAYE shortfall, or corporation tax that has been deferred since the pandemic, professional insolvency advice must be sought without delay.
The clearest trigger is correspondence from HMRC indicating that a Time to Pay arrangement is at risk, that a debt has been passed to a field force officer, or that a winding up petition is being considered. At any of these stages, speaking to a licensed Insolvency Practitioner is appropriate.
However, the directors who tend to achieve the best outcomes are those who seek advice before HMRC reaches that point. A licensed Insolvency Practitioner works with business directors carrying HMRC debt on a regular basis. They understand how HMRC operates, their appetite for debt negotiations, and how a company's tax position fits into its broader financial picture.
