How to Act When Faced with Winding Up Petitions

winding-up-petition-liquidation2It’s 5:00 am and your alarm rings. You get up, go get a shower, eat your breakfast and head to work. Arriving at the office, you start to open your laptop and your phone rings. It’s your secretary and someone’s eagerly waiting for you: your creditors and their winding up petitions. Yikes!

That would no doubt be an absolutely awful day at work. It’s a nightmare and you wish you’d wake up stat! Unfortunately it isn’t. This is reality. Now what can you do?

But before we get to answer that question, allow us to explain winding up petitions a little further for those who find the term quite foreign to their ears.

A winding up petition is one brought about by disgruntled creditors after having repeatedly tried but failed to collect from the owing company. It is a legal and oftentimes final option resorted in order to force a business to pay up its debts. It shall be enforced through an order released by court after having proved the insolvency claim to be valid. Upon its release, the order shall put the debtor company into forced liquidation, assign a liquidator to sell of its assets and sue the proceeds to pay the creditors.

As the debtor company if such a thing happens to you, these are what you should do.

  • Call in an insolvency practitioner. – You need a professional for cases like this specifically one who handles and has the experience in insolvency and winding up petition cases. You cannot wing it on your own especially during a sensitive scenario such as a winding up petition.
  • Look for solutions and options. – Weigh out all the options that you have and check their feasibility, their costs and their pros and cons. You can go for a pre-packed administration for example or even contest the claims of the creditors.
  • Talk to the creditors. – You can talk to the petitioning creditors and come to an agreement with them. If you’re successful, they may withdraw but that should come with extreme efforts on your part.
  • Perform all of above fast. – Winding up petitions should be acted on fast. After the creditors appeal to court, the latter shall have seven days until an order and final verdict is released. It is only within that timeframe where the business can do the first three items in this list. After an order has been released, it shall be considered final.

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