Winding up procedures is a process undertaken by companies who wish to put their business operations to a close. This is done for many different reasons such as the inability to pay off creditors, change and loss of market’s interest, depleted demand and for some the absence of heirs or simply retirement. For whatever purpose winding up your business has its cons or so called disadvantages. Here is a list of them.
1. You will lose the power at managing and having control over corporate assets since once a liquidator has been appointed he or she will take care of the entire process from sales to distribution. You cannot anymore dispose them.
2. The period of time given for you to resume operations will not be for profit purposes or personal gain but rather only for the completion of the procedures in winding things up.
3. The court order (compulsory) also serves as a letter of dismissal to all employees except those which are bound to a fixed term contract which requires a period of notice for the enforcement in which case such employee is entitled to a sum for damages.
4. If you own or are part of any other business whether in an industry related to or not to the one you are winding up, it can cause some harm from a minor scratch to a solid blow.
Now there too are advantages to such procedure as opposed to other forms of its kind:
1. It is beneficial for business owners whose purpose is not due to insolvency.
2. It is a formal and official manner in which everyone gets their fair share and interest to the company (i.e. creditors, owners, shareholders, etcetera)
3. It will only take a few months to finish which will not be a burden to all parties involved.
4. It formally puts a company to a close.
Now the question is whether you should or should not wind up your operations. Should you do it voluntarily? Are the warning signs what you think they are? To better have a decision that will fit your situation and benefit you best, it is advisable that you talk to your consultant and adviser or some other expert who knows and expertise in such affairs.
Remember that putting a close to your business does not only affect your won interests. It deals with a lot of other people too.