There’s a list kicking around the Internet, supposedly or maybe definitely, written by a 95 year old man. The list has 45 life lessons, presumably built up from his lifetime of experiences.
Along these lines I thought that it would be a good idea to list 10 things that a director should not do when he receives a winding up petition. This list is based on years and years watching directors do exactly what you have told them not to do!
When you are served a Winding up Petition, NEVER do any of these ten things!
1. Nothing: You will regret it. Pay it, Do a Company Voluntary Arrangement or voluntary liquidate your company. Don’t do nothing – do something.
2. Tell your Bank: Your bank manager has strict unwavering guidelines. He/she is a puppet – the lowest of the low in the pecking order. By all means give them a solution such as a Company Voluntary Arrangement but never a problem such as a winding up petition because the manager will simply freeze your bank account. You have been warned!
3. Tell your suppliers: If you tell them then they will not supply you. You know that if your company is insolvent with no way out then you should cease to trade immediately – but that’s not you is it? You probably know that if you propose a Company Voluntary Arrangement then you will be able to rescue your business.
4. Tell your customers: Why would your customers risk being supplied by you when you have a winding up petition in place? They wouldn’t so don’t tell them.
5. Tell your friends: They think that they know better than you and all they are all armchair experts. You can sort this problem out but not with their help.
6. Borrow money from your family: You would never hear the end of it if you do. It will haunt you for the rest of your life. Do not remortgage or charge loans against your house. You set up your business in a limited company so that nobody can touch your personal money, remember?
7. Give up: By all means if there is no hope then voluntary liquidate with the petitioning creditor’s consent. But you’re better than that. Take an honest look at your business. With a bit of tweaking here and there could the business be viable? Perhaps the winding up petition was as a result of a poor cash flow caused by a customer not paying you. If that’s the case then you were perhaps unlucky, but that’s no reason to close your company.
8. Act on early advice: You don’t know enough. Insolvency is not that hard to understand. I bet most people in Insolvency could not do your job but you could do theirs. You have 7 days from receiving the petition before it can legally be advertised so use this period to understand your position. Don’t get help from the first person that you talk to. Insist on Testimonials and make sure that if you want to save your company by proposing a Company Voluntary Arrangement, that the company that you have chosen to help you has a sound record inCompany Voluntary Arrangements.
9. Believe the salesman: You can’t be expected to sort out a winding up petition on your own. You will need professional help. Don’t just sign up with someone on the end of the telephone unless you are confident in their services and have at least spoken to one of their clients. Don’t sign up with an insolvency company that sends out a sharp salesman to persuade you. If you value your company then go and visit them at their offices and poke your nose in. You have to feel comfortable.
10. Don’t look on the Internet: Everything is on the internet. The good, the bad and the indifferent. If an insolvency company carries out distasteful practices – and some do, then you’ll find all about it somewhere on the Internet. Look beyond their website and search social media such as Facebook and Twitter. Only the brave companies are willing to stick their heads above the parapet!
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