Winding-up petitions should be taken seriously; one should know the immediate action that should be taken in case such a petition ends up at their office or doorstep. A winding-up petition might cost you everything that you have worked on building for yourself if you are not careful or resolve the issues as soon as it occurs. For any business owner who has failed at paying the debt, a winding-up petition could be a reason for stress and emotional exhaustion. It is even more taxing if you were aware of this, yet you could not do anything to find a solution for this struggle.
While you might think that this would be the end for your company or firm, taking strict actions and talking to professionals at Summit Law LLP and other experienced experts can help you save your company from shutting down. With expert help, you will have a solution at hand, a chance at saving your company and building your fortune again. However, feeling lost is not unusual during this tough period, and to help you understand the consequences that you might face with a winding-up petition, some of the notable ones have been mentioned below.
Defining Winding-up Petition
A winding-up petition is often the last resort from the creditor’s side to get back the money that has been given to the debtors. As one can already understand by the name, a winding-up petition is a petition to the authorities/court to wind up the company of the person who owes them money so that with the proceedings or with the liquidation of the assets, some amount of money could be paid back to the creditor.
A winding-up petition is often regarded as a warning sign for the debtor, notifying them that their firm or business would be at serious risk if the indebted amount is not paid within the time. The most serious consequence of a winding-up petition would be the liquidation of all the assets of the debtor to pay back the creditor; otherwise, at times, matters could be settled by settling the money outright or by coming to a suitable arrangement.
The sooner you talk to an expert, the sooner you will be able to find a potential solution that would promise you a stable future. Here are some of the potential pitfalls that one could face with a winding-up petition in action:
You Get A Short Deadline To Pay Back
Usually, from the time of a winding-up petition to turn into a winding-up order, you would get a time of 6-8 weeks, which is not much when it comes to paying back huge amounts of money. As a business owner, you would get a really narrow timeframe to accumulate the money you owe and thus save your company from being sold off.
By talking to your lawyers and experts, there are several solutions that you could opt for within this timeframe. But remember, you have to be quick and decisive as time is running out.
Other Creditors Might Join In
As soon as a winding-up petition is placed into action, usually, it is advertised or put up on notice boards for the media. This would alert other creditors, too, if there are any, and they might join in on the winding-up petition too, which would turn out to be disastrous for you. This is considered to be a serious consequence of winding-up petition that should not be taken lightly.
You will not only be burdened with just one creditor, but a whole lot of them, which could jeopardize your company, and you might not ultimately be able to hold on to your firm with such a short timeframe for paying back everything.
Freezing Of Your Business Bank Account
With a winding-up petition, not only will your creditor be running after you, but the bank will create issues for you too. Once they get to know about this, your bank account would be frozen, making it impossible for you to withdraw or opt for any kind of transaction, big or small. The reason behind this is a pretty simple one; the bank will not allow you to diminish your assets once a winding-up petition is signed against you.
The bank would freeze your account to ensure you cannot make any kind of payment to yourself, settle any kind of claim with other creditors whose name is not mentioned on the winding-up petition, or sell any of your company’s assets. If any such thing happens, you would be liable personally to make all the payments.
It Would Damage The Reputation Of Your Company
Aside from your company or firm completely closing down, another long-lasting consequence of a winding-up petition would be the damage it would cause to your company’s reputation. The reason behind this is a simple one: if your company Is liquidated, it means the operations and functioning of your company were not stable, which would remove your client’s trust in you.
Suppliers and clients would know that they are dealing with a company that has a winding-up petition against them; even clients would be wary of giving orders or money to you in case they do not get it back later on. You must take immediate measures to save your company.
Costs Related To Winding-up Petition
The cost of a winding-up petition does not only include the money you owe, but there would be additional costs too. You have to pay your legal expert as well as other related costs. Be prepared because a winding-up petition could take time to get resolved.
Wrapping up, these are some of the consequences that you will face if you receive a winding-up petition. Everything you have built from scratch would go down the drain because a winding-up petition requires immediate liquidation of the company. Get the best legal help so that you get the opportunity to save your company from the downfall and save your company’s reputation as well. Do thorough research when looking for legal experts, and go for someone who has prior experience and can resolve your case smoothly.