A winding-up petition can feel like the final stage for a struggling company.
But in some cases, it may still be possible for the directors to place the company into Creditors’ Voluntary Liquidation — commonly known as a CVL — before the court makes a winding-up order.
The key point is timing.
A winding-up petition is not the same as a winding-up order. The petition is the creditor’s application to the court. The order is the point at which the court formally places the company into compulsory liquidation.
So, where a petition has been presented but the order has not yet been made, the company may still have options.
However, this needs to be handled carefully.
Once a petition has been issued, the company is in a much more sensitive position. Bank accounts may be frozen, creditor pressure may increase, and payments or asset transfers made after the petition date can create serious complications if a winding-up order is later made.
So how can a CVL still happen when there is already a winding-up petition?
There are usually a few routes that may need to be considered.
1. Engage a licensed insolvency practitioner immediately
The first step is to take advice quickly.
A CVL is not something directors should try to manage informally, especially once a petition has been issued. The company will need a licensed insolvency practitioner to review the position, advise on the options, prepare the necessary paperwork, and help manage the risks around the existing petition.
At this stage, the insolvency practitioner will usually want to understand:
- who issued the petition;
- the hearing date;
- whether the petition has been advertised;
- whether the company’s bank account has been frozen;
- whether the debt is admitted, disputed, or capable of being paid;
- what assets and liabilities the company has;
- whether there are employees, stock, book debts, vehicles, leases, or other urgent issues;
- whether any transactions have taken place after the petition date.
This review is important because once a petition exists, the company is not simply choosing between “carry on” and “liquidate”. It is managing an active court process.
2. Consider whether the petition debt can be dealt with
In some cases, the petitioning creditor’s debt may be paid, settled, withdrawn, or otherwise resolved.
If the petition debt is genuinely disputed, there may be grounds to challenge the petition. If the debt is admitted and funds are available from a third party or another legitimate source, settlement may be possible.
However, directors must be extremely careful about using company funds after a petition has been presented. Payments made after the petition date can be vulnerable if a winding-up order is later made.
This is one of the reasons specialist advice is essential.
If the petition can be withdrawn or dismissed, the company may then be able to proceed into CVL in a cleaner and more controlled way.
3. Ask for the petition to be adjourned while the CVL is progressed
Another route may be to seek an adjournment of the petition hearing.
This can give the company time to complete the CVL process, including shareholder approval and the creditors’ decision procedure.
An adjournment is not automatic. The court will want to understand why more time is needed, whether the proposed CVL is realistic, and whether creditors are being prejudiced.
But in the right case, an adjournment can allow the company to move into voluntary liquidation rather than simply waiting for a compulsory winding-up order.
4. Proceed with the CVL before the winding-up order is made
Where the court has not yet made a winding-up order, the directors may be able to progress the CVL process.
This usually involves the directors deciding that the company cannot continue due to its financial position, instructing an insolvency practitioner, calling the shareholders’ meeting, passing the necessary resolution to wind up the company, and notifying creditors so that they can participate in the appointment of the liquidator.
For a CVL, at least 75% by value of shareholders must usually agree to the resolution.
Once the CVL begins, the nominated liquidator takes control of the company’s affairs, realises assets, deals with creditor claims, investigates the company’s conduct and transactions, and brings the company to an orderly close.
However, the existing winding-up petition cannot simply be ignored.
The petitioning creditor and the court may still need to be informed, and the petition may need to be withdrawn, dismissed, stayed, adjourned, or otherwise dealt with. Otherwise, there is a risk of parallel proceedings or a compulsory winding-up order being made despite the steps taken by the company.
5. Apply for a validation order where necessary
One of the biggest risks after a winding-up petition is presented is section 127 of the Insolvency Act 1986.
In broad terms, if a winding-up order is later made, certain payments or transfers of company property made after the petition date may be treated as void unless the court orders otherwise.
This can cause real practical problems.
For example, the company may need to pay wages, insurance, utilities, rent, professional fees, or other necessary costs. It may need to collect book debts, preserve assets, or deal with urgent operational matters.
In some cases, a validation order may be needed to authorise specific payments or transactions.
This is not about carrying on as normal. It is about protecting the company, its creditors, and the integrity of the process while the position is being resolved.
6. Keep the petitioning creditor informed where appropriate
Communication can make a significant difference.
If the petitioning creditor is ignored, they may press ahead with the winding-up order.
But if they are told that the company is taking proper insolvency advice and moving quickly into a CVL, they may be prepared to support an adjournment, withdraw the petition, or at least not oppose the voluntary process.
That said, this has to be handled carefully. The company should avoid making promises it cannot keep, and directors should not prefer one creditor over others without advice.
7. Move quickly before the court makes the order
The window is narrow.
Once a winding-up order is made, the company enters compulsory liquidation. At that point, the process is no longer voluntary in the same way, and the Official Receiver will usually become involved at the outset.
That is why speed matters.
The earlier directors take advice, the more options may still be available.
The longer the petition is left unresolved, the greater the risk of:
- bank account freezes;
- loss of supplier confidence;
- creditor escalation;
- avoidable transaction issues;
- compulsory liquidation;
- increased scrutiny of director conduct.
The takeaway is simple.
A winding-up petition does not always mean it is too late to enter CVL.
But it does mean the company is in a serious and time-sensitive position.
Where directors want to pursue a CVL after a petition has been presented, they need to act quickly, take advice from a licensed insolvency practitioner, manage the court process properly, and avoid making payments or transfers without understanding the risks.
Handled correctly, a CVL may still provide a more structured and controlled route into liquidation than waiting for the court to make a compulsory winding-up order.
But once a petition is in play, every step matters.
Disclaimer: This article is for general information only and does not constitute legal, financial, or insolvency advice. Every company’s circumstances are different, and directors should seek advice from a licensed insolvency practitioner, solicitor, or suitably qualified professional before taking action.
