My company received a section 466 notice or winding-up petition. How do we stop it?

A notice under section 466 of the Companies Act 2016 lands at your registered office. Or worse, a winding-up petition is served. The clock is short, and the consequences for the company's bank accounts, contracts and reputation can be immediate.

If you received a section 466 notice

The company is deemed unable to pay its debts if, for 21 days after service, it neglects to pay the sum, or to secure or compound for it to the creditor's satisfaction (section 466(1)(a)). Within that time you can:

• pay the debt if it is truly owed;
• propose security or a settlement acceptable to the creditor, in writing;
• dispute the debt in writing with reasons and documents, if there is a genuine dispute; or
• apply to court urgently to restrain the creditor from presenting a petition, where the debt is bona fide disputed on substantial grounds or there is a genuine cross-claim.

Do not simply ignore the notice because you think the claim is wrong.

Checklist for a dispute

• Was the notice left at the registered office?
• Does the debt exceed the prescribed amount?
• Is the sum actually due, or is it subject to conditions, defects or set-off?
• Was the demand for the right amount and from the right creditor?

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If a petition has been presented

• Void dispositions: any disposition of company property after presentation is void unless the court orders otherwise (section 472(1)). Payments out of company accounts may need a validation order.
• Opposing the petition: the company can file an affidavit opposing it, for example showing the debt is disputed or the company is solvent.
• Paying the petitioner: other creditors may seek to be substituted, so settlement should be handled carefully with the court.
• Stay of other actions: after presentation and before an order, the company or a creditor may apply to stay other proceedings (section 470).

Rescue alternatives

Where the company is in genuine financial difficulty but viable, alternatives may include a judicial management application (sections 404 onwards), a scheme of arrangement with a restraining order (section 368), or a corporate voluntary arrangement for eligible companies. These have strict conditions.

Directors' exposure

Directors should not move assets after a petition, and should keep proper records. Some conduct can lead to personal liability; see director liability for company debts.

Example

A Kuantan contractor receives a section 466 notice for an invoice it disputes because the subcontractor's work failed inspection. It replies within days with inspection reports, and when the subcontractor threatens a petition, applies for an injunction to restrain it. The court restrains the petition, leaving the subcontractor to sue in the ordinary way.

Common mistakes

• Ignoring the notice until a petition is advertised.
• Disputing only verbally.
• Continuing to make payments after a petition without a validation order.
• Paying the petitioner off without considering other creditors.

When to speak to a lawyer

On the day the notice or petition arrives. See civil litigation or contact us.

Frequently asked questions

Can the company keep trading after a petition?

It can, but payments and transfers may be void without a validation order. Take advice before significant transactions.

Is a partial payment enough?

Only if the creditor accepts it as compounding or the balance falls below the threshold and the dispute position is clear. Put any arrangement in writing.

Will the directors be made bankrupt?

Not automatically. A company's winding up is separate from directors' personal positions, unless they gave guarantees or are found personally liable.

Sources & fact check

Legal points in this article were checked against the primary sources below. The law can change; this is general information, not legal advice.

1. Companies Act 2016 (Act 777), AGC Laws of Malaysia
2. Malaysian Department of Insolvency (MdI): Corporate insolvency and winding up (Companies Act 2016 s.466(1)(a))
3. Rules of Court 2012 (P.U.(A) 205/2012), text published by the Malaysian Bar, including Orders 12, 13, 18, 19 and 93

Fact-checked on 17 Oct 2026