When a company cannot pay its debts, any creditors who are owed more than £750 can present a winding up petition to close the company down and liquidate its assets. However, given the severity of the consequences, the company that receives the winding up petition will usually do everything it can to repay the petitioning creditor. If it can repay the debt in question, the creditor can withdraw the petition. This removes the threat of liquidation and prevents the winding up petition from being taken over by another creditor of the company.
How do you withdraw a winding up petition?
- The first step, as the creditor company, is to get written permission from an officer of the company to settle the debt out of court. This letter should state the creditor’s intention to withdraw the petition if the debt is paid.
- Once a settlement has been agreed with the debtor and the payment has been received, you should notify the debtor in writing that the payment settles the debt and that you intend to withdraw the petition.
- The next step is applied to the court for permission to withdraw the winding up petition. A winding up petition can only be withdrawn if it is at least five days until the petition hearing and the petition is yet to be advertised. You will have to stipulate to the court that the petition has not been advertised and present proof of the settlement and the intent to withdraw.
- Finally, you should send a letter to the court withdrawing the petition as soon as the court has given its permission. A copy of the letter should be sent to the debtor as proof that the winding up petition has been withdrawn.
If you’ve received a winding up petition or are being threatened with one, you should seek advice as soon as possible. At AABRS, we have significant experience with dealing with insolvent companies and can advise you about the possible steps that you can take. Call Simon Renshaw on 0208 444 2000 for an initial telephone discussion.