In Show 083 – 5 Consequences of Winding Up a Company originally broadcast on Facebook Live on Monday 23 April 2018 we explore this interesting topic.
Today for Fast Fix Monday we talk about the five consequences of winding up a business. Once a business has been declared insolvent a liquidator will be appointed to sell-off the assets of the business. There are a number of consequences of having appointed a liquidator. Today, we’ll discuss five of those consequences.
- You lose control
The first consequence is the most obvious but one that you have to understand before you go down this path. Once a liquidator is appointed you lose all control over the company and its assets.
- The directors are directors in name only
The directors may still hold that title but they too lose all control. Once the liquidator takes over the directors can no longer exert any influence on the direction of the company.
- All of the assets will be sold to pay debts
If the company needs to have a liquidator appointed it’s because the business is insolvent and can’t pay back creditors. A liquidator’s primary responsibility is to pay back as much of that debt as possible.
- The directors may still owe for personal guarantees
If a director or someone else at the company has personally guaranteed any of the debts incurred by the business that money still has to be paid back. The bankruptcy of a company won’t wipe out the debt that was personally guaranteed.
- Government regulations may stop you from practicing your profession
If you’re company has gone bankrupt in certain trades like the building industry you are banned from being able to operate in that industry for three years. Different industries have different rules so you need to know what those rules are before you declare bankruptcy.
More about this Show
We started Business Legal Lifecycle to create a simple way for you to understand complex legal terms. Most importantly we want to help you to develop a plan to take your business successfully into the future. There’s a startling statistic the underscores the importance of developing a solid plan. The majority of business owners are just seven months away from losing everything. A single aspect of your business that is not set-up correctly can shut down your whole operation very quickly. Legal advice is not cheap and even when you can afford it there is often a divide between lawyers and their clients. We want to close that gap once and for all. We want to put legal knowledge and tools into your hand to prevent the worst from happening to you.
Twice a week we are going to deliver those tools right to your home or office with Business Legal Lifecycle TV. We’ll start the week with Fast Fix Monday, a short 5-10 minute video that will tackle a single issue that businesses have to deal with. Then on Wednesday’s our main show will feature with more fulsome discussions and interviews all delivered in a straightforward and easy to understand format.