Can a Winding Up Petition be Dismissed?
At the court hearing of a winding up petition, the petitioner, creditors, company directors and shareholders all have the right to be heard. The court may also choose to hear from anyone with an interest in the company’s property. Once all the representations have been made, the court will then choose to:
- Dismiss the petition
- Adjourn the hearing
- Make a winding up order
- Make an interim order
- Make any other order it sees fit
Under what circumstances can a winding up petition be dismissed?
- The debt has been paid
A winding up petition can be dismissed before the court hearing is held by the petitioning creditor. This will often be the case if the debt covered by the winding up petition has been paid, and the petitioning creditor does not want any other creditor to take over the petition and wind up the company.
- An agreement has been reached to repay the debt
If an agreement between the petitioner and the debtor has been reached for the debt to be repaid, there will need to be evidence to support this. Verbal agreements are not permissible in court, so assistance will be required from a solicitor or a turnaround practitioner. If evidence of an agreement is produced, the petition can be dismissed.
- An abuse of process by the petitioner
If the judge believes a petitioner is using the court process to settle a personal score or a dispute or to give their own company a commercial advantage, the petition can be dismissed.
- The company can repay the debt
A judge may decide to dismiss a winding up petition if they think the company is able to repay a reasonable proportion of the money it owes. For example, if a company voluntary arrangement (CVA) were to be proposed, the judge can leave the majority of the creditors to decide on the company’s fate.
- The debt is unproven
If it has not been established that the debt, and the value of the debt, is indisputably due, the judge can choose to dismiss the petition. In this case, the judge can award costs to either party. Alternatively, the judge may adjourn the hearing until the debt has been proven.
If you have received a winding up petition, please contact Simon Renshaw on 020 8444 2000 or email firstname.lastname@example.org for more free advice.