Consequences of Winding up

• 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.