What are winding-up petitions and winding-up orders?

A winding-up petition happens when a creditor asks the court to close down a company that has not paid its debts. It is a formal request for the business to be declared insolvent so its assets can be sold to pay what is owed. 

Because most petitions are approved, getting one is a serious warning sign that the company is in financial trouble and needs to act quickly.

Once a petition is submitted, the company and its directors are notified. If the debt is not settled quickly, the court can set a hearing date to decide whether the business should be liquidated. Then, at the court hearing, the judge either dismisses the petition or approves it; if approved, the court makes a winding-up order, and compulsory liquidation begins.

Summary

A winding-up petition is a formal request for an in-debt business to be declared insolvent so that its debts can be paid. A winding-up order is the court’s decision made after a winding-up petition, confirming that the company is insolvent and formally starting the compulsory liquidation process.