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How can a Winding Up Petition be set aside?


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How challenging a Winding Up Petition can save your company

A winding up petition against your company can quickly result in liquidation and closure, so it’s important to know your rights in this situation, and whether you could have the petition ‘set aside’ by the court.

This means that it is cancelled, but you need to be sure of your grounds for requesting this, that they are genuine, and you present them in detail with plenty of supporting documentary evidence.

As you only have seven days to put together a case in your defence, you’ll also need to act quickly, so under what grounds could you request a winding up petition is set aside by the court?

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What are the possible grounds for setting aside a winding up petition?

  • The debt is substantially disputed

If a creditor has issued a winding up petition even though the debt is in genuine substantial dispute, they are abusing court process. You can seek an injunction that prevents them publicly advertising the winding up petition in the Gazette.

An advert placed in the Gazette is likely to alert the bank to your situation and result in your accounts being frozen, so preventing this is key. A dispute may involve a difference in interpretation of a contract’s terms and conditions, for example, or a belief that the goods you ordered were defective.

  • You have a counter-claim against the creditor

If the petitioner owes money to your business over and above the amount you owe them, you should be able to set it off against your debt. This effectively wipes out the debt, with no further action being required by the creditor for this particular debt.

  • Technical or procedural errors

Winding up petitions must be factually accurate and served in the correct way in order to be legal. Sometimes errors can be made if the petitioner has failed to seek professional advice.

A winding up petition can be served at the company’s registered address, or hand-delivered to a director, officer, or employee. If not hand-delivered, it can also be attached to the door of the company’s registered office.

Setting aside a winding up petition

  • A witness statement should be filed at court in opposition to the winding up petition no less than five business days prior to the hearing. A copy of the statement and supporting documentation should also be sent to the petitioner.
  • If the petition has already been served, you may be able to obtain an injunction to prevent it being published in the Gazette.
  • Another option may be to seek an adjournment to allow you to evaluate company administration as a possible way out of the situation. Company administration is na official insolvency procedure and provides protection for your company against creditor legal action.
  • Should you believe your company could pay the debt given a little more time, seeking an adjournment of the hearing date might also be an option. This could allow you to restructure or reorganise your affairs.

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As a company director you can put your case at the petition hearing, but it’s advisable to obtain legal representation. Real Business Rescue has extensive experience in dealing with winding up petitions, and can provide the professional help you need.

If your business has received a winding up petition, you need to act quickly – please contact one of the team to arrange a free same-day consultation. We operate with 100+ offices and can quickly establish the next step to take.

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