When faced with winding up petitions, what does an entrepreneur have to do? Today we’ll talk about this very important topic so be sure to read on and take notes.
Winding up petitions (WUP) are a process that involves the dissolution of a corporation. Primarily brought upon by disgruntled creditors, it is submitted to court where an order shall be released if the evidence and claims prove to be valid thus forcing the company in question to liquidate and cease operations.
This affects insolvent companies that no longer have the ability to fulfill their obligations to creditors and whose total liabilities exceed its total assets. In the course of a company’s lifetime, a WUP is considered to be one of the most fatal scenarios that could befall any institution as it forces it to liquidate whether it wants to or not, strips of director control and even involves investigation. It’s definitely a bomb, if we would have it.
Handling winding up petitions is a very serious matter and smart entrepreneurs know this very well. There are a couple of things that they ensure to make the process as less painful as it already is. In some scenarios, they even get to flip the situation and avoid it altogether.
#1: They act really fast.
In this situation, the court shall release the decision seven days after the petition, a time where entrepreneurs can take action. It’s relatively short but if efficiently utilized shall be enough.
#2: They hire an expert.
Even directors and officers are not experts at liquidation procedures. After all, that’s not what running a business is about. This is why hiring a qualified insolvency and liquidation practitioner must be done. From them, advice and best courses of action can be taken.
#3: They talk to creditors.
One of the reasons why creditors go with a winding up petition is because payment of the value owed from them has been repeatedly delayed and denied. Their last option to recover such value is the WUP. Within the seven days, the company can still come up with an agreement which could make the creditors withdraw the petition.
#4: They assess the values.
Smart entrepreneurs will scrutinize every detail. Is the amount brought up by the creditors at court valid? If it isn’t then, it is crucial to bring this up.
When faced with winding up petitions, smart entrepreneurs should know what to do. In fact, they should already have a game plan for such a threat.
Check out this website: http://www.aabrs.com