Lawrence O’Hara, Debt Adviser at Northern Ireland Debt Solutions, explains the circumstances where a winding up petition can be challenged and why petitions are always likely for financially distressed companies.

What happens if you receive a winding up petition?

If your company receives a winding up petition, this could result in the closing of your company unless immediate action is taken. Once a winding up order is issued, there is a limited window during which the winding up petition can be disputed. If your objection has no standing, your company will enter compulsory liquidation.

A winding up petition is a powerful tool used by creditors to recover funds they have previously attempted to collect but to no avail. There are often warning signs that indicate whether a creditor wishes to escalate the debt, such as intensifying pressure in the form of payment reminders, interest, late payment penalties, and threats of legal action. If the debt remains outstanding, court action will typically be pursued as the final resort.

If the court greenlights the winding up petition, a winding up order will be issued, and the company will soon enter compulsory liquidation. As part of the liquidation process, creditors will be recompensed in an orderly fashion if the funds are available. This is a likely fate for distressed companies as creditors will pursue this route to maximise their chances of recovering the money owed.

Can you contest a winding up petition?

While a winding up petition can potentially lead to the end of a business, you can contest this decision if you have a valid reason. You must apply to the court within five working days of the winding up petition being issued to plead your case if the debt can be challenged, settled or an agreement reached. You must be able to provide evidence to back up your argument, show that the company is not insolvent and propose a realistic plan to settle the debt.

You may challenge the winding up petition for reasons such as:

• You reject the claim that you owe money.
• You disagree with the value of the debt.
• The creditor owes you money which either cancels out the debt or brings the debt below £750, the minimum amount for a winding up petition.

The winding up petition can also be set aside if any of these conditions are met:

• You can pay the debt in full.
• You can negotiate a payment plan.
• You wish to seek an adjournment.
• You wish to enter insolvency proceedings.

To successfully have a winding petition dismissed, you must have a clear plan in place to deal with the debt in question and sufficient evidence to support your claim.

You must apply to rescind the winding up order within five working days of when the order was made. To do this, you must issue a witness statement which requires details of company debts and assets. A further hearing will be held during which both parties will present their case and supporting evidence, after which a decision will be made.

While it’s possible to tap out from a winding up petition, your claim must be strongly backed and a clear plan in place to clear or challenge the debt in question.

About the author

Lawrence O’Hara is a corporate and personal insolvency expert at Northern Ireland Debt Solutions, an approved debt adviser helping Northern Ireland residents in debt since 1989.

See also

A guide to compulsory liquidation

Place an insolvency notice

Company insolvency statistics - May 2025

Images

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Publication date

1 July 2025

Any opinion expressed in this article is that of the author and the author alone, and does not necessarily represent that of The Gazette.