What do I do if I receive a threat of a winding up petition?

Statistics show that in recent times, numbers of winding up petitions are rapidly increasing. Winding Up Orders & Petitions increasing to decade-high levels - Business Rescue Experts 

The issuing at court of a winding up petition against your company is an incredibly serious matter. 

Even if the debt is disputed, the very fact that a petition has been filed can have far reaching consequences. 

Banking covenants and major contracts may all be automatically breached by this event happening, allowing lenders to pull their funding from the company, and customers to terminate their arrangements.

Other creditors may be able to piggy back onto the petition creating a snowball effect. 

The filing of the petition (assuming the debt is genuine) is evidence of insolvency, bringing into play director’s duties to creditors. 

For all of these reasons, a threat of a petition should be actioned with urgency. 

If the debt is disputed then this must be communicated to the creditor. 

Even if the debt is partially disputed, but at least £750 of the debt is accepted (perhaps a surprisingly low figure) then the law says that the winding up petition can proceed until the debt is paid off.

If a company is in this position, then any defence should be properly analysed. If there is no defence, then a review should be carried out to check whether the petition is a symptom of a wider and more fundamental problem.

Professional advice should be sought as soon as possible.

At TRE, we are highly experienced in assisting companies where there is a threat of a winding up petition. 

There will likely be a number of options available to the company in this situation, but swift analysis from an experienced advisor is key.