Customer winding-up petition? What it means for your invoice

Finding out that a customer has a winding-up petition against it is a bad moment for anyone chasing an unpaid invoice. It does not automatically mean you will lose your money, but it does change what you should do next, and quickly. This guide explains the process in plain English so you can react sensibly.

It covers England and Wales. Scotland and Northern Ireland have their own procedures, which are not covered here (GOV.UK says different rules apply to Scottish companies).

What a winding-up petition is

A winding-up petition is an application to the court, usually made by a creditor, asking for a company to be wound up (put into compulsory liquidation) because it cannot pay its debts. Where the petition relies on an unpaid statutory demand, the debt must be more than £750 (see the next section).

If the court grants the petition, it makes a winding-up order. An official receiver then takes charge, the company's assets are sold and the proceeds are shared between creditors. GOV.UK is clear that a creditor might not get all, or any, of what it is owed.

A petition is not the end of the road on its own. GOV.UK notes that the petitioning creditor can withdraw it if the company pays or agrees an arrangement to pay.

Statutory demands and the £750 threshold

Many petitions start with a statutory demand, a formal written demand for payment. The company then has 21 days to pay, or make an arrangement. Section 123 of the Insolvency Act 1986 says that if a creditor owed more than the set figure serves a written demand at the registered office and the company has not paid, secured or compounded the debt within three weeks, the company is treated as unable to pay its debts. That figure is currently £750 in the legislation.

A statutory demand is not the only route. Section 123 also lists other tests, such as a court judgment that has gone unpaid and a company whose liabilities outweigh its assets.

Where petitions are advertised, and when

The Gazette explains that a petition is advertised in The Gazette (notice code 2450) so that other creditors know about it. The advert must appear at least seven business days after the petition was served on the company, and at least seven business days before the court hearing.

The Gazette also notes that, once the advert is out, other creditors, including the company's bank, may act to protect their own position, for example by freezing accounts.

This timing has a practical consequence, which is our inference from the rules above: a petition is presented to the court, then served, then advertised. So there can be a gap between the petition being presented and you being able to read about it in the Gazette.

Why section 127 matters if you get paid

This is the point suppliers most often miss. Under section 129 of the Insolvency Act 1986, a compulsory winding up is generally treated as starting when the petition is presented, not when the court makes its order. Under section 127, in a winding up by the court, any disposition of the company's property made after that start is void unless the court orders otherwise.

In practice, a payment out of the company's bank account to you is a transfer of the company's money. If a winding-up order is later made, a payment made after the petition was presented could be open to challenge. The Gazette's guidance says a company can ask the court for a validation order under section 127 to get its frozen accounts working again, and that court action could reverse transactions made in the meantime.

Whether a particular payment is actually caught, and whether anyone could recover it from you, depends on the facts and on the court. That is a question for a solicitor or insolvency practitioner. We are not saying every payment will be clawed back. The point is that being paid by a company with a live petition is not the same as being safely paid.

What to do as a creditor

Practical steps, roughly in order:

1. Stop extending further credit. Move to pro forma or payment upfront, or pause deliveries, while you take advice.
2. Check the record. Look up the company on the Companies House register and search The Gazette for the petition advert. Note the hearing date if you can.
3. Take advice before doing anything dramatic. Speak to a solicitor or insolvency practitioner, particularly before accepting a large payment or agreeing new terms.
4. Keep your paperwork together. Contracts, invoices, delivery notes and correspondence will all be needed if you claim.
5. Decide whether to attend the hearing. GOV.UK says anyone wanting to come to the hearing must give notice to the court beforehand, so ask your adviser early.
6. If a liquidator or official receiver is appointed, register your claim. GOV.UK says that if you are owed more than £1,000 you should complete a Proof of Debt form. If it is £1,000 or less, give the person handling the case your contact details and the amount owed. Registering keeps you informed and gives you a vote at creditor meetings, but it does not guarantee payment.

Catching problems earlier

Companies House records can show signs of trouble, such as overdue accounts or a strike-off notice, and the petition itself is advertised in The Gazette, so check both. You can run a quick look-up with our free Company check. If you would rather not check customers by hand, you can watch up to five companies for free and get an alert when something changes on the register.

This guide is general information, not legal or financial advice.

Sources

• Insolvency Act 1986, section 123 (legislation.gov.uk)
• Insolvency Act 1986, section 127 (legislation.gov.uk)
• Insolvency Act 1986, section 129 (legislation.gov.uk)
• Wind up a company that owes you money (GOV.UK)
• Make and serve a statutory demand (GOV.UK)
• Wind up a company: the court hearing (GOV.UK)
• Getting a winding-up order (GOV.UK)
• Register as a creditor in a bankruptcy or liquidation (GOV.UK)
• Issuing and serving petitions: a guide (The Gazette)
• How does the winding up petition process work? (The Gazette)

Updated 30 September 2026 · All guides