Creating Wording up Petition

A winding up petition is when one or more creditors petition the court to close a business or company because of their outstanding debt. This process of forcing a company to be closed is called Compulsory Liquidation. Creditors must submit an application to the court. This application is refer to as a winding up petition. Creditors have to provide proof that they unsuccessfully attempted to collect their debt. The court will thoroughly review the petition, and make a decision on whether to grant a winding up petition.

Once the winding up petition is issued to the company, they have the discretion to pay the debt in question, or make a case that the petition is unreasonable. If the petition is upheld, then the court will grant a winding up petition to begin the process of liquidating the company. The court will appoint a liquidator to evaluate all company assets, so payments can be made to creditors. There is no guarantee that the creditors, who filed a winding up petition, will receive any payments. Secured creditors take precedence over all other creditors’ debt. The liquidator will freeze all business accounts until the petition is resolved. The liquidator will investigate the activities of the Director of the company to ensure that they are not trading, while the company is in a state of insolvency. If a director is found guilty of trading, then they will be personally responsible for any debt accumulated during this period. Companies have the option to file a voluntary winding up petition, if they think their business cannot be saved and needs to be liquidated.

Many creditors believe that the imminent threat of a petition is enough to force a company to pay their outstanding debts. If your company is served with a winding up petition, then you should retain the services of a licensed insolvency practitioner. You should secure the services of an insolvency practitioner as quickly as possible to avoid irreversible financial losses. Bankruptcy and compulsory liquidation is a highly complicated sector of the law, and you need an insolvency practitioner who has expertise and experience in the laws pursuant to insolvency and winding up petitions. Make sure your insolvency practitioner has accreditation from the Institute of Practitioners. A winding up petition relieves the Director of his control of the company, so it is important to have an experience insolvency practitioner to avoid any additional problems arising from the dissolution of the company. An Insolvency practitioner can compiled an alternate proposal to avoid liquidation. An insolvency practitioner can help set up an arrangement to pay off creditors, and they can offer advice on reorganizing the company to avoid future cash flow problems.