Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Bitcoin Black Swan - GOOGLE! - 24th Jul 21
Stock Market Stalling Signs? Taking a Look Under the Hood of US Equities - 24th Jul 21
Biden’s Dangerous Inflation Denials - 24th Jul 21
How does CFD trading work - 24th Jul 21
Junior Gold Miners: New Yearly Lows! Will We See a Further Drop? - 23rd Jul 21
Best Forex Strategy for Consistent Profits - 23rd Jul 21
Popular Forex Brokers That You Might Want to Check Out - 22nd Jul 21
Bitcoin Black Swan - Will Crypto Currencies Get Banned? - 22nd Jul 21
Bitcoin Price Enters Stage #4 Excess Phase Peak Breakdown – Where To Next? - 22nd Jul 21
Powell Gave Congress Dovish Signs. Will It Help Gold Price? - 22nd Jul 21
What’s Next For Gold Is Always About The US Dollar - 22nd Jul 21
URGENT! ALL Windows 10 Users Must Do this NOW! Windows Image Backup Before it is Too Late! - 22nd Jul 21
Bitcoin Price CRASH, How to SELL BTC at $40k! Real Analysis vs Shill Coin Pumper's and Clueless Newbs - 21st Jul 21
Emotional Stock Traders React To Recent Market Rotation – Are You Ready For What’s Next? - 21st Jul 21
Killing Driveway Weeds FAST with a Pressure Washer - 8 months Later - Did it work?- Block Paving Weeds - 21st Jul 21
Post-Covid Stimulus Payouts & The US Fed Push Global Investors Deeper Into US Value Bubble - 21st Jul 21
What is Social Trading - 21st Jul 21
Would Transparency Help Crypto? - 21st Jul 21
AI Predicts US Tech Stocks Price Valuations Three Years Ahead (ASVF) - 20th Jul 21
Gold Asks: Has Inflation Already Peaked? - 20th Jul 21
FREE PASS to Analysis and Trend forecasts of 50+ Global Markets by Elliott Wave International - 20th Jul 21
Nissan to Create 1000s of jobs with electric vehicle investment in UK - 20th Jul 21
Bitcoin Halvings Price Forecast and Stock to Flow Analysis - 18th Jul 21
Dell S3220DGF Unboxing and Stand Assembly - 32 Inch 165hz Curved Gaming Monitor Amazon Discount - 18th Jul 21
What Does The Fed Mean By “Transitory Inflation” And Why Is It Important To Understand? - 18th Jul 21
Will the US stock market’s worsening breadth matter? - 18th Jul 21
Bitcoin Halving's Price Projection Forecasts Trend Trajectory - 18th Jul 21
Dell S3220DGF Price CRASH to £305! 32 Inch 165hz Curved Gaming Monitor Amazon Bargain - 16th Jul 21
Google, Amazon and Netflix are Scrambling For This Rare Gas - 16th Jul 21
Sheffield Millhouses Park New Children's Play Area July 2021 Vs Old Play Area - Better or Worse? - 16th Jul 21
Inflation Soars, Powell Remains Unmoved. What about Gold? - 16th Jul 21
Goldrunner: Gold Could Jump To $1,900-$2,100 In Next 30 days – Here’s Why - 15th Jul 21
Tips For Finding The Right Influencers - 15th Jul 21
ECB Changed Monetary Strategy. Will It Alter Gold’s Course? - 15th Jul 21
NASA And Big Tech Are Facing Off Over This Rare Gas - 15th Jul 21
Will the U.S. Dollar Lose Momentum In the Second Half of 2021? - 15th Jul 21
Bitcoin Stock to Flow Model Forecasts Infinity and Beyond! - 14th Jul 21
Proteomics: The Next Truly Massive Investing Opportunity - 14th Jul 21
Massive Solar Storm to Hit Earth 2025, Coronal Mass Ejection (CME) Danger and Protection Solutions - 14th Jul 21
Is This The Best Way To Play The Coming Helium Boom? - 14th Jul 21
Meet SuperMania and its Ever-Present Sidekick, SuperMeltdown - 14th Jul 21
How NFTs Are Shaking Up Arts Trading - 14th Jul 21
Gold: High Time to Move Out of the Penthouse - 13th Jul 21
Climb Aboard! Silver Should Run Up To $38 In Next 30 Days - 13th Jul 21
How Will Remote Work Impact the U.K. economy? - 13th Jul 21
Why Helium Stocks Are Set To Soar in 2021 - 13th Jul 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

How can a company avoid a winding-up petition?

Companies / SME Dec 13, 2020 - 06:37 PM GMT

By: Sumeet_Manhas

Companies

Winding-up petitions allow the creditors who did not get their payment before the court so that the company is forced for a closure. Any creditors who owe the minimum amount i.e decided according to the law can opt for a winding-up petition to the courts. 

After the petition is received by the company, a hearing will be held by the court. Before the hearing, the company will get seven days to get rid of the winding-up petition. If the company cannot prove the petition to be wrong or if they fail to repay the debts the company will be wound-up with an official notice. The winding-up order will be issued by the court and the official receiver will be appointed to liquidate the company. 


Ways to avoid the petition 

This is a petition that is filed by a creditor in the court with the aim of forcing the company to close down which means compulsory liquidation. A creditor must owe the maximum amount so that a winding-up petition can be issued against the company. The most simple way to avoid the winding-up petition is to make sure that the company is free from all loans from all the creditors.

The time must be maintained to pay off the debts and in full amount. Unfortunately, if there is a tough time for the company or if the company is insolvent paying the money timely is not possible. The best thing at that time one needs to do is to have a talk with the creditors and also try to make an agreement so that how and when the company will be able to repay the outstanding amount. 

In case the company is insolvent, the directors of the company will consider taking and implementing actions to rescue the company. This process of rescuing is known as CVA or Company Voluntary Arrangements. Or else the company can also enter into administration. 

Negotiating with the creditors

As a first step, the company must try to negotiate with the directors so that an agreement is made between the company and the directors. The agreement must state how the company will repay the dues and when. If the money is owed by HMRC, the company will get adequate time to negotiate a Time to Pay Agreement, where the company can pay the dues over the period of time agreed by both sides. On behalf of the company negotiation just be with other creditors also. 

CVA or Company Voluntary Arrangement

Company voluntary arrangement or CVA is a formal process that makes an agreement between the unpaid creditors and the company. A company that cannot pay its debts gets a chance to repay the loans over an agreed time. 

If CVA is implemented, the creditors must need the agreement of at least 75% of the creditors of the company. The creditors must explain that turning out the company can help them to achieve their money that is unpaid.

Administration

Opting for administration will rescue the company that is unpaid. One administrator is appointed by the company to manage the administration. This will help to restore the profitability of the company. In the administration, a moratorium is placed which means the creditors become unable to take any sort of legal actions or even issue the winding-up petitions. It is considered as one of the powerful tools to prevent the company from facing the winding-up petition. 

Creditor’s voluntary liquidation 

One of the statutory processes is the creditor’s voluntary liquidation. It helps to prevent the liquidation of the unpaid amount of the company. In such a case the company’s shareholders and directors together come to a conclusion to close the company and also appoint a liquidator to go on the closure procedure. The director opts for compulsory liquidation to get more control of the process. 

Take help from agency and lawyers 

Companies can opt for help from expert agencies and lawyers to take a proper step during the first seven days of the petition being issued. The first seven days are extremely vital for the company. It is the time that is given to the company to take proper and prompt action and also prove themselves to be innocent in the court. The lawyers and the agency can also help to prove that the debts are disputed before the petition is issued. 

The bottom line

Once the company is unable to pay off the debts, proper action must be taken and implemented so that the company cannot be wound-up. There are proper actions mentioned in the content so that the company can decide which action will be benefited for them.

Every company is different therefore proper action must be taken so that it helps to avoid the wounding-up of the company. Avoiding the winding-up petition can help the company to get rid of any legal hassles. 

By Sumeet Manhas

© 2020 Copyright Sumeet Manhas - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in