Written by Maxim Sealey, Associate Solicitor · SRA-regulated · Last reviewed 28 September 2026
Disputing the exact amount of a debt is generally not enough on its own to stop a company from being wound up. To successfully halt liquidation proceedings, a company must show that liability for the debt itself is genuinely disputed on substantial grounds, not simply that the figure being claimed, or the interest calculation applied to it, is wrong or open to argument. This distinction between disputing quantum and disputing liability is one of the most important, and most misunderstood, points in insolvency litigation and it can be the difference between successfully defending a winding-up petition and losing your company regardless of a genuine, unresolved argument over the numbers.
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Liability vs Quantum: Why the Distinction Matters
A creditor can present a winding-up petition against a company where it’s unable to pay its debts, and one of the standard ways of establishing this is by showing a debt is due and unpaid. Directors facing such a petition often assume that raising any dispute about the debt, including disagreeing with the amount claimed, will be enough to have the petition dismissed or restrained. That assumption is incorrect.
The courts draw a sharp line between a dispute over liability (whether the debt is owed at all) and a dispute over quantum (how much is owed). Only a genuine and substantial dispute over liability is generally sufficient to prevent a winding-up petition from proceeding. A dispute purely over the amount owed, or over how interest has been calculated on an amount that is otherwise accepted as due, will not usually be enough on its own.
Why the Law Draws This Line
The Purpose of Winding-Up Proceedings
Winding-up petitions exist to deal with companies that cannot pay their debts, not to resolve detailed commercial disagreements about exact sums owed. If every argument over quantum were enough to block a petition, companies with a genuine, established underlying debt could delay insolvency proceedings indefinitely simply by querying the figures, even where there’s no real doubt that some money is owed.
What Counts as a Genuine Dispute Over Liability
A genuine liability dispute typically involves a substantive legal or factual argument that no debt is owed at all. For example, a dispute over whether a contract was validly formed, whether goods or services were actually delivered as claimed, or whether a set-off or counterclaim genuinely extinguishes the debt. By contrast, accepting that a debt is owed but disputing exactly how much, or disputing the rate or method of interest calculation applied to an otherwise undisputed principal sum, generally falls on the quantum side of the line.
What This Means in Practice for Creditors and Debtor Companies
For a creditor pursuing a winding-up petition, this is good news where the opposing party’s main objection is to the amount or the interest calculation, rather than to whether anything is owed at all. In many cases, a company can still be successfully wound up notwithstanding a live dispute over quantum, provided the underlying liability isn’t genuinely in question.
For a company facing a petition, this means that simply raising a query over the figures is unlikely to be a sufficient defence on its own. Directors need to assess honestly whether they have a genuine basis to dispute that any debt is owed, rather than assuming a disagreement over numbers will automatically buy time or protection.
Steps to Take If You’re Facing or Considering a Winding-Up Petition
If you’re a creditor: gather clear evidence establishing the underlying debt is due, and be prepared to show any dispute raised by the debtor company relates only to quantum rather than liability.
If you’re a director facing a petition: get advice quickly on whether your dispute genuinely goes to liability, since time limits and procedural steps in insolvency litigation move fast, and a petition left unanswered can result in serious consequences for the company and, in some circumstances, its directors.
In either case, early legal advice tends to produce a stronger, more efficiently run case than reacting after a petition has already been advertised.
A Practical Illustration
Suppose a supplier invoices a company for goods delivered, and the company accepts the goods were received and used but argues that the invoice has overcharged for certain items, or that interest has been applied at too high a rate or from too early a date. Provided the company accepts that some payment is genuinely due for the goods, this is a quantum dispute. The petitioning creditor may still be able to proceed to wind up the company, notwithstanding the unresolved argument about the precise figure, because the underlying liability that the company owes something for goods it accepts it received isn’t genuinely in question.
Contrast this with a company that says the goods were never delivered at all, or that the contract under which they were supposed to be delivered was never validly agreed. That’s a liability dispute, and if it’s genuine and substantial, it’s far more likely to succeed in resisting the petition.
What Companies Can Do If They Genuinely Dispute the Debt
Where a company does have a genuine liability dispute, the correct response is usually to raise that dispute clearly and in writing as early as possible, ideally well before a petition is presented, in response to any statutory demand or pre-action correspondence from the creditor. Courts will look more favourably on a dispute that was raised promptly and consistently than on one that appears to have been constructed only once a petition has already been advertised. Gathering supporting documentation — contracts, correspondence, delivery records, or evidence of a counterclaim at an early stage puts the company in a far stronger position if the matter does proceed to a hearing.
Why Early Advice Makes a Real Difference
Winding-up proceedings move quickly once a petition is presented, and the consequences of inaction can be severe, including the company’s bank accounts being frozen once the petition is advertised. Directors who wait until close to a hearing date to take advice often find their options have narrowed considerably. Getting advice as soon as a statutory demand or petition is received or even earlier, at the point a dispute first arises with a creditor, gives directors the best chance of properly characterising the dispute and responding in the most effective way available.
How Saracens Solicitors Can Help
Our Dispute Resolution team advise both creditors seeking to enforce genuine debts through winding-up proceedings, and companies and directors facing petitions where they believe there’s a genuine defence. We can assess quickly whether a dispute is likely to be treated by the court as a liability dispute or a quantum dispute, and advise on the most effective strategy accordingly.
Have a question about your specific situation? Call us on +44 (0)20 3588 3500 or press Enquire at the top of this page, our team responds quickly.
Frequently Asked Questions / Questions & Answers
Can I stop a winding-up petition just by disputing the amount owed?
Generally, no. Disputing quantum alone, the amount claimed or how interest has been calculated, is not usually sufficient to stop a winding-up petition if the underlying liability for the debt is not genuinely in dispute.
What is the difference between disputing liability and disputing quantum?
Disputing liability means arguing that no debt is owed at all. Disputing quantum means accepting that some debt is owed but disagreeing about the exact amount, such as the total sum or the interest applied to it.
What counts as a ‘genuine and substantial’ dispute over liability?
It typically requires a real legal or factual basis for saying no debt is owed. For example, a dispute over contract formation, non-delivery of goods or services, or a valid set-off rather than a bare assertion or a dispute confined to the figures.
Can a company still be wound up if there’s an unresolved argument about interest?
Yes, if the underlying principal debt is not genuinely disputed. A dispute limited to the interest calculation is treated as a quantum dispute and will not usually prevent the petition from proceeding.
What should I do if I’ve received a winding-up petition and I think it’s wrong?
Seek legal advice immediately. You’ll need to establish quickly whether your dispute goes to liability or only to quantum, since this affects your options and the urgency of the steps you need to take.
How can Saracens Solicitors help with a winding-up petition?
We advise both creditors and debtor companies on winding-up proceedings, including assessing whether a dispute is likely to succeed, negotiating settlement where appropriate, and representing clients in insolvency litigation.
