Winding-up petitions and The Gazette

A winding-up petition asks the court to put a company into compulsory liquidation. It is usually presented by a creditor who says the company cannot pay its debts, and it is the most serious step a creditor can take. The petition itself is not recorded on the Companies House register. It is advertised in The Gazette, and that advertisement is often the first public sign that a company is in trouble.

Who petitions, and on what grounds

Under the Insolvency Act 1986 a company may be wound up by the court on several grounds. The one that matters in practice is that the company is unable to pay its debts. The Act treats a company as unable to pay when a creditor owed more than £750 has served it with a statutory demand and for three weeks it has neglected to pay the sum, or to secure or compound for it to the creditor’s reasonable satisfaction; when a judgment against it has gone unsatisfied; or when the court is satisfied that it cannot pay its debts as they fall due or that its liabilities exceed its assets.

Most petitions are presented by trade creditors and by HM Revenue and Customs (see HMRC winding-up petitions). Section 124 of the Act also allows petitions by, among others, the company itself, its directors, its contributories (in practice its shareholders, on conditions), the Secretary of State on public-interest grounds, the Financial Conduct Authority in the cases the Act gives it, and the official receiver where a company in voluntary liquidation cannot properly continue in it.

Why it is advertised

In England and Wales the petitioner must advertise the petition in The Gazette, the government’s official public record. The insolvency rules fix the timing: the notice must appear at least seven business days after the petition was served on the company and at least seven business days before the hearing. The purpose is to tell the world. Other creditors may then support or oppose the petition, and anyone dealing with the company is put on notice.

The practical consequences follow from the advertisement rather than the hearing. Banks routinely freeze a company’s accounts when a petition is advertised, because payments made after a petition is presented can be undone if an order follows. Suppliers tighten terms. For a company that is in fact solvent, an advertised petition can do real damage, which is why the courts restrain advertisement where a debt is genuinely disputed.

The timetable

The Insolvency (England and Wales) Rules 2016 fix the order of events between the petition and the hearing:

• Presentation. The petitioner files the petition at court, and the court fixes a hearing date.
• Service. The petition is served on the company at its registered office.
• Advertisement, in The Gazette, at least seven business days after service and at least seven business days before the hearing (rule 7.10).
• Five business days before the hearing, the petitioner files a certificate that the petition was served and advertised as the rules require (rule 7.12), and the company files any witness statement opposing the petition (rule 7.16).
• By 4pm on the business day before the hearing, any creditor or contributory who intends to appear gives the petitioner notice, saying whether they support or oppose the petition (rule 7.14).
• The hearing, at which the court makes an order, dismisses the petition or adjourns it.

A petition can be withdrawn only before it is advertised, with the court’s permission and the company’s consent. See when a petition is withdrawn or dismissed.

What happens next

• A winding-up order. The company enters compulsory liquidation. The Official Receiver becomes liquidator (an insolvency practitioner may later take over), the directors’ powers end, and Companies House changes the company’s status to “Liquidation”. The order appears in the company’s filing history. See winding-up orders.
• Dismissal. The court does not make an order: the debt was paid, the company showed a substantial dispute, the petition was defective, or the petitioner did not proceed. A dismissal is advertised in The Gazette too.
• Withdrawal, with the court’s permission, usually because the debt has been settled before the hearing.
• Adjournment, often to let the company pay, or to let another creditor take over the petition.

A dismissed petition records the court’s decision and nothing else. It does not show that the debt was never owed, nor that it was. It does show that a creditor took the company to court, and when.

Why Companies House alone can miss it

Companies House records the outcome, not the petition. If an order is made, the register shows it. If the petition is dismissed or withdrawn, the company’s record is unchanged, and the register never shows that the company was petitioned at all. A company that was petitioned three times in two years and paid each time at the door of the court looks, on Companies House, like a company that was never petitioned.

Scotland and Northern Ireland have their own courts and rules. Scottish petitions are heard in the Court of Session or the sheriff court and advertised in The Edinburgh Gazette; Northern Irish ones in the High Court and The Belfast Gazette. All three editions are published on the same Gazette website.

In a report

A Check the Director report reads The Gazette’s corporate insolvency notices for every company the person has been an officer of, and shows two kinds of notice: a petition to wind the company up, and the dismissal of such a petition. Each appears in the company’s timeline with the date it was advertised and a reference to the notice, so the period of the person’s appointment can be read against it. The report draws on the notices under the Open Government Licence, and it states what was advertised, not why. To check a company yourself, see how to search for a winding-up petition; for what the register shows once an order is made, see company statuses.

This guide describes the public record in general terms, for England and Wales unless it says otherwise. It is not legal advice.