One thing that many companies in financialdifficulty fear is insolvency and then the subsequent forced liquidation of their business. For those who have worked exceptionally hard on trying to turn the fortunes of their company around, being obligated to cease operations is a bitter blow.
A winding up petition is a legal application that is initiated by a creditor who hopes to recover compensation for a debt in excess of $750. The aim is to force the company into compulsory liquidation in order to receive the sum of money owed to them.
Although the process is a last resort for many creditors, the consequences are severe and if immediate action is not taken after being served a winding up petition, a company faces a very high possibility of forced (compulsory) liquidation.
For anyone who believes that this is a possibility for their company, it is advised that they obtain accurate information immediately of how the process works before the possibility becomes reality. Being informed in advance is an excellent way to being prepared for the worst and being able to make wise decisions that can save abusiness.
Detailed information about the ins and outs of the winding up procedure can be found from a large number of reliable free resources on the internet. When browsing these resources, a company should make sure that the organisation has a track record of helping others in the same situation and getting positive results.
When it comes to avoiding a winding up petition procedure for a company, there are several steps that should be taken to reduce the chances of it becoming a reality.
Firstly, any company should try and avoid the possibility of being served a winding up petition by making sure they receive sound financial advice as soon as their business starts struggling in this area. There are thousands of expert insolvency advisors providing free or paid financial advice services, and a relatively small investment can save a company much more further down the road.
Company accountants who have intimate knowledge of the company can offer valuable insights into where the company is going wrong. It is worth checking with the local government services offered to business professionals in your area.
It is also advisable to maintain good relationships with all company creditors. Winding down petitions can sometimes be served maliciously if relations have seriously soured between the respective parties, and some angry creditors are willing to go all the way to the courts to claim what is owed to them.
Make sure that all communications with your creditors are open and honest, and that if debts are accrued, that you are able to re-negotiate with creditors and put in place temporary solutions until your finances improve. Free online debt and liquidation advice services can often give excellent advice on approaching your creditors to negotiate a solution.
Most winding up petitions, however, are served to a company by HMRC. Needless to say, dealing with problems in paying tax should be a top priority for businesses. Whilst HMRC will begin with the sending of threatening letters, this can quickly escalate into the commencement of legal procedures against companies in order to recover unpaid taxes. And don’t forget tax penalties will accrue adding substantially to the tax debt.
Whereas creditors should definitely be kept happy as much as possible, falling foul of HMRC is not a good situation for a company to be in, so make sure you seek out advice immediately if you can’t pay your company taxes.
Whena winding up petition is served to a company, they must act immediately. Being armed with expert advice is essential to make the bestof this bad scenario. However, prevention is definitely better than the cure; by resolving creditor and tax issues early on through seeking expert insolvency advice, a company can most likely avoid compulsory liquidation.