A Winding Up Petition (WUP) is perhaps the scariest thing that could happen to any company and we would not dare ask why. After all, the process ends up by forcefully putting an entity into liquidation whether it wants to or not as a result of a court petition brought up by unpaid creditors who have exhausted all of their means to collection. So how does the winding up petition procedure roll out? Below is the five step process.
Step No. 1 – Creditors’ Appeal
Creditors to whom the company owes a certain amount will first attempt to recover and collect from the latter by releasing a claim. Noncompliance after twenty days can entitle the former to seek assistance to harness a winding up petition. Oftentimes, this is the last resort attempted at given the expenses that it can cost creditors. This is also the reason why those that attempt it are those whose recoverable amount will be greater than their expenses. Once the petition is submitted, the court will then review it and if accepted, such will be forwarded to the debtor company deemed insovlent.
Step No. 2 – 7 Days to Act
The company is only given a maximum of seven days to act. This means that there is only a week tops to either pay the debt in full, pursue an agreement, engage in a dispute if the debts are doubtful or take on a Creditors Voluntary Liquidation or an Administration should the court and the creditors allow so.
Step No. 3 – The Petition Ad
After seven days from the issuance of the petition, the creditors will then be published a petition advertisement in the London Gazette as a means of making the WUP a public matter.
Step No. 4 – Freezing of Accounts
After the advertisement, bank accounts and all assets pertaining to the insolvent debtor company will then be frozen. Disbursements, sale and transfers of any form will be disallowed to avoid illegal distribution and protect creditor rights.
Step No. 5 – WUP Granting
With the granting of the winding up order by the court, a liquidator will then be appointed to liquidate the insolvent company. The latter will lose all of its powers and control over the company and there is nothing more that they can do to stop the winding up petition procedure. This is essentially the end and cessation of the business for them. The proceeds from all asset sales shall be distributed to creditors.
Aabrs.com to find out more on winding up petition.