Winding up petitions: how to serve one and what to do if served

What a winding-up petition is

A winding-up petition asks the court to put a company into compulsory liquidation. Section 122(1) of the Insolvency Act 1986 lists the grounds on which the court may do that, and the one creditors use is paragraph (f): the company is unable to pay its debts.

It is the sharpest instrument in the creditor's box. A county court claim asks the debtor to pay; a petition asks the court to end the company.

That force cuts both ways. A petition presented against a company that genuinely disputes what it owes is an abuse of the court's process and the petitioner pays for it. Everything here is the law of England and Wales. In Scotland a petition goes to the Court of Session or the sheriff court under different rules, and section 123(1)(c) of the same Act gives Scotland its own test of inability to pay.

The £750 threshold and proving the company cannot pay

Section 123 of the Insolvency Act 1986 sets out when a company is deemed unable to pay its debts. The route almost every creditor relies on is section 123(1)(a): the creditor is owed a sum exceeding £750 then due, has served a written demand in the prescribed form, and the company has for three weeks afterwards neglected to pay it or to secure or compound for it to the creditor's reasonable satisfaction.

£750 is a low bar and it has not moved since 1986, which is one reason petitions are used for debts far larger than the threshold. The debt also has to be due: a sum payable next month, or subject to a genuine set-off, does not qualify.

There are other limbs. Section 123(1)(b) treats an unsatisfied execution on a judgment as proof. Section 123(1)(e) allows the court to be satisfied on evidence that the company cannot pay its debts as they fall due, and section 123(2) covers a company whose liabilities, including contingent and prospective ones, exceed its assets. Those routes need evidence. Most creditors use the statutory demand instead, because it produces a clean, dated fact.

The statutory demand route and the 21 days

A statutory demand on a company is a formal written demand for payment in the form the Insolvency (England and Wales) Rules 2016 require. Rule 7.3 sets out what it must contain: the company's name and registered office, the creditor's details, the amount and what it is for, any judgment it rests on, and a statement that the company must pay within 21 days of service, failing which the creditor may present a winding-up petition. It must be dated and signed by the creditor or somebody authorised, and any interest has to be shown separately and only up to the date of the demand.

The demand is served at the registered office. Nothing is filed at court and there is no fee. Three weeks after service, if the debt is unpaid and no arrangement has been reached, the company is deemed unable to pay its debts and the creditor can petition. GOV.UK warns that a demand cannot usually be made where the debt is over six years old, because the underlying claim is time-barred.

Why a disputed debt must never be used

This is where creditors get caught. The winding-up court does not decide contract disputes. Where the company disputes the debt on substantial grounds, or has a genuine cross-claim that equals or exceeds it, the court will dismiss the petition and will normally order the petitioner to pay the company's costs. Presenting a petition to pressure a company into paying a contested sum is treated as an abuse of process.

"Substantial grounds" means more than a bare denial. A company saying "we do not accept the invoice" without more will not stop a petition. A company producing correspondence showing that the goods were rejected as defective, or that the parties agreed a reduced sum, will. The test is whether there is a real argument to be tried, and the court will not try it in the winding-up list.

The exposure goes beyond costs. A company can apply for an injunction to restrain the creditor from advertising the petition, and if the advertisement has already caused the bank to freeze the account, the company may have a claim for the loss. Where the debt is arguable, the right tool is a claim, and our guide to debt recovery sets out the ladder from letter before action through to judgment and enforcement. The petition sits at the top of it, for debts that are clear.

Presenting, serving and advertising the petition

The petition is prepared on form Comp 1 with the details rule 7.5 requires: the company's registered office and share capital, the nature of its business, the grounds, and where it rests on a statutory demand, a statement that the demand was served. Form Comp 2 confirms the contents and three copies go to the court. Paid-up share capital of £120,000 or more goes to the High Court, and below that to the nearest court dealing with insolvency to the company's registered office.

Once the court has sealed the petition and fixed a hearing date, the sealed copy is served on the company under rule 7.9 by leaving it at the registered office, and a certificate of service on form N215 goes back to the court.

Then the advertisement. Rule 7.10 requires notice of the petition to be published in the Gazette not less than seven business days after service on the company and not less than seven business days before the hearing. The court may dismiss the petition if the notice is not given in accordance with that rule, so the timing is not optional. The seven days after service exist so that a company which disputes the debt has a window in which to apply to restrain advertisement before the damage is done. Banks, credit reference agencies, suppliers and customers all monitor the Gazette, and the effect on the company is described from the other side below.

What it costs to present one

Two payments go out before the petition is issued. The court fee for a petition to wind up a company is £352 on the civil court fees list published on GOV.UK and updated on 13 July 2026. The petition deposit, which funds the Official Receiver's work if an order is made, is £2,600 on the GOV.UK winding-up guidance as it stands today. Both figures change, so check the page on the day.

On top of that sit the process server's fee, the Gazette fee and legal costs. If the petition succeeds, the petitioner's costs are usually ordered to be paid out of the company's assets, and the deposit is repaid if the liquidation raises enough. A creditor should assume the assets may not be there, because the petitioning creditor ranks with every other unsecured creditor for what is left. A petition is worth presenting where the company is trading and solvent enough that the threat of losing the business produces payment, and where the debt is clear. It is a poor way to collect from a company that has already stopped.

If your company is served with a petition

The first day matters more than any other. Read the petition, note the petitioning creditor, the debt and the hearing date, and work out which of three positions the company is in.

If the debt is owed and the company can pay it, pay it with the petitioner's costs and ask for the petition to be dismissed. Paying the debt alone does not end the petition, because another creditor can apply to be substituted as petitioner, so the aim is dismissal, and before the advertisement if possible.

If the debt is owed and the company cannot pay it in full, the conversation with the creditor has to happen now. A creditor offered a realistic proposal, with something paid up front, will often agree to an adjournment; a creditor who hears nothing will advertise. This is also the moment to take advice on whether the company is viable at all, because the routes in our guide to a company in financial difficulty, such as a voluntary arrangement or administration, have to be started before a winding-up order.

If the debt is genuinely disputed, the company should say so in writing immediately and, if the creditor does not withdraw, apply to the court for an injunction restraining advertisement of the petition. That application is made quickly, with a witness statement setting out the dispute, and it is the point of the seven business days between service and the Gazette. A company that waits for the hearing to raise the dispute has usually already lost its bank account.

Whichever position applies, rule 7.16 requires a company opposing the petition to file and serve its witness statement in opposition not later than five business days before the hearing.

The frozen bank account and validation orders

Section 129(2) of the Insolvency Act 1986 deems a winding up by the court to commence at the time the petition is presented, and section 127 provides that any disposition of the company's property made after the commencement of the winding up is void unless the court otherwise orders. If an order is later made, every payment the company made between the petition and the order can be unwound.

Banks know this. Once the petition appears in the Gazette, the company's bank will normally freeze the account, because otherwise it risks being asked to repay every transaction it processed. Wages, rent, suppliers and HMRC all stop being paid on the same day.

The answer is a validation order under section 127: an order that specified payments, or payments in the ordinary course of business, are to be treated as valid despite the petition. Paragraph 9.11 of the Practice Direction on Insolvency Proceedings sets out what the court expects: a witness statement covering how the petition came about, the company's financial position, a cash flow forecast, the dispositions sought and why they must be made before the hearing, and the bank account details. Notice of the application goes to the petitioning creditor and to any creditor who has given notice of intention to appear.

The court will only make the order on credible evidence either that the company is solvent and able to pay its debts as they fall due, or that the specific transactions will benefit, or at least not prejudice, the unsecured creditors as a class. A company that cannot show one of those will not get its account back, and that, more than the hearing, is what forces the decision about whether the company survives.

The hearing and the timeline to it

The court fixes the hearing date when it seals the petition. Between presentation and hearing, the sequence is fixed by the rules: service on the company, then at least seven business days before the Gazette notice, then at least seven business days between the notice and the hearing, with the company's evidence in opposition due five business days before. The gap the court leaves is set by its list and is usually a matter of weeks, so a company has some time and none to waste. Other creditors who want to support or oppose the petition give notice of intention to appear, and the petitioner files a list of them before the hearing.

The hearing is short and the outcomes are three. The court can make the winding-up order, where the debt is proved, the procedure has been followed and the company has no answer. It can dismiss the petition, where the debt has been paid or the company shows a substantial dispute. Or it can adjourn, which is common where the company has paid part, has agreed terms with the petitioner, or has a rescue procedure in train. Adjournments are in the court's discretion, so a company asking for one should arrive with a proposal and evidence, and should expect to be asked why the money was not found already.

After the order

A winding-up order takes effect immediately. The Official Receiver becomes liquidator, the directors' powers cease, and the company's assets are collected and realised for the creditors. The directors must co-operate with the Official Receiver, deliver up the books and records and provide a statement of affairs, and their conduct in the period before the order is examined.

For the petitioning creditor, the order is usually the end of the debt: the creditor proves in the liquidation alongside everyone else and receives whatever dividend the assets allow. For the directors, the order is where their own exposure begins. Payments made after the petition, transactions at an undervalue, preferences to connected creditors and trading on while insolvent all come under review, and the personal consequences are set out in our guide to the options for a company in difficulty. The lesson from both sides of the petition is the same: the useful decisions are all made in the days after it is served, and very few of them are available by the time the court sits.

Frequently asked questions

What is the minimum debt for a winding-up petition?

More than £750. Section 123(1)(a) of the Insolvency Act 1986 deems a company unable to pay its debts where a creditor owed a sum exceeding £750 has served a written demand in the prescribed form and the company has neglected to pay it for three weeks. The figure has not changed since the Act was passed, so in practice petitions are used for debts far above it. The debt must also be due and undisputed, because the court will not wind up a company on a sum it genuinely contests.

How much does it cost to present a winding-up petition?

Two payments go out before the petition is issued. The court fee is £352 on the civil court fees list published on GOV.UK and updated on 13 July 2026, and the petition deposit that funds the Official Receiver is £2,600 on the GOV.UK winding-up guidance today. Process server, Gazette and legal costs come on top. If an order is made, the petitioner's costs are normally paid from the company's assets, but only if the assets are there.

Can I petition on a debt the company disputes?

No. A petition rests on the company being unable to pay its debts, and a debt disputed on substantial grounds does not prove that. The court will dismiss such a petition and will usually order the petitioner to pay the company's costs, and presenting one to force payment of a contested sum is treated as an abuse of process. The company can also apply to restrain advertisement and may have a claim for any loss the petition causes. A disputed debt belongs in an ordinary claim.

What happens to the bank account when a petition is advertised?

It is usually frozen. Section 127 of the Insolvency Act 1986 makes any disposition of the company's property after the petition is presented void unless the court orders otherwise, and if a winding-up order follows, payments made in between can be unwound. Banks freeze the account once the Gazette notice appears, because they will not carry that risk. The company can apply for a validation order allowing specified payments, but it has to show either that it is solvent or that the payments will not prejudice the unsecured creditors.

How long do I have to respond to a winding-up petition?

Days, not weeks. The Gazette notice cannot appear until seven business days after service, which is the window for a company that disputes the debt to apply to restrain advertisement before the bank account is frozen. Any evidence opposing the petition has to be filed and served not later than five business days before the hearing under rule 7.16 of the Insolvency (England and Wales) Rules 2016. The hearing itself is fixed by the court when the petition is sealed and is usually some weeks after presentation.

Can the hearing be adjourned?

Yes, at the court's discretion. Adjournments are commonly granted where the company has paid part of the debt and agreed terms with the petitioner, or has a company voluntary arrangement or administration in progress and needs time to complete it. The court expects a reason and evidence, and it will ask why the money has not already been found. A company that turns up with nothing more than a request for time should expect the order to be made.

If I pay the debt, does the petition go away?

Only if it is dismissed or withdrawn. Paying the petitioning creditor removes that creditor's interest, but once the petition is advertised another creditor can apply to be substituted as petitioner and carry it on. The aim is to pay the debt and the petitioner's costs, get the petitioner's agreement to seek dismissal, and do it before the Gazette notice if at all possible. If the petition has already been advertised, the dismissal is made at the hearing and the bank account stays frozen until then unless a validation order is obtained.

Sources & further reading

• Insolvency Act 1986, section 122
• Insolvency Act 1986, section 123
• Insolvency Act 1986, section 127
• Insolvency Act 1986, section 129
• Insolvency (England and Wales) Rules 2016, rule 7.10
• Insolvency (England and Wales) Rules 2016, rule 7.16
• GOV.UK: wind up a company that owes you money
• GOV.UK: civil court fees (EX50)

This article is general information, not legal advice. The law changes and depends on your circumstances — always take advice on your specific situation before acting. Last reviewed 22 September 2026. AD Solicitors Limited is a recognised body regulated by the SRA (no. 8011228).