Before the Covid-19 pandemic, the terms winding and liquidation were not widely used in the business industry. Even for most of the entrepreneurs, these were the words they used to avoid hearing as well. This was mainly due to the negative thoughts linked to the bankruptcy. But with the pandemic impact across the globe, several news reports regarding the liquidation of companies are being observed. Many of these companies were even operating in the industry for a long time; still, they decided to wind up due to the huge stress posed by the pandemic.
In most cases, liquidation is an outcome of a declining business. In general, liquidation can be defined as a legal process that helps to bring a company to the end. When a company decides to follow the liquidation exercise, the creditors or court will appoint a liquidator in Singapore to take charge of the company assets and will also work on the relevant winding up affairs. They will also carry the debt proofs, distribute available surplus amounts and settle the accounts with creditors as well. In case the company assets are insufficient to meet existing liabilities, the appointed liquidator will dispose of the remaining assets to recover funds and the available amount will be used to pay off the creditor’s debt.
There are so many ways approved liquidator Singapore can help you preserve business value after liquidation:
- To stem losses
One of the most common myths about company liquidation is that a company must be insolvent to proceed ahead with the liquidation process. But this is not correct because the government has also defined solvent liquidation procedures for the solvent companies. This is suitable as long as the company receives more than 75% approval from existing shareholders. Such solvent liquidation process is called Members Voluntary Liquidation and it can be used to preserve the value of company assets while preventing losses.
- Protection against various wrongful trading activities
The solvent liquidation process can protect officers or directors of the company from being charged for any wrongful trading activity. This process is also named insolvent trading and it links directly to the day to day of operations of the company. This process is very useful for an insolvent company and can help them to avoid damage to the business reputation in the long run. The updated norms and approved liquidator Singapore can also ensure safety from worse consequences related to company operations.
- Prevent dissipation of assets
Under some dire situations, the line dividing unacceptable and acceptable may get blurred. This may sometimes lead to a breach of various financial duties by company officers and directors. Such breaches can lead to the disposal of properties at undisclosed and undervalued transactions related to involved parties. The power of a liquidator in Singapore also becomes very wide in the complicated scenarios and they can take actions against perpetrators and illegally taken claw back assets.
With such modified and improved procedures, business owners can find better ways to handle their assets while winding up company operations.