Process of liquidating a company
World over, insolvency procedures help entrepreneurs close down unviable businesses and start up new ones.This ensures that the human and economic resources of a country are continuously rechannelised to efficient use thereby increasing the overall productivity of the economy. However, as businesses grow in size there is also a danger that poor management, bad business judgement or plain fraud may result in a business becoming unviable.The process should be time-bound, aimed at maximizing the chances of preserving value for the stakeholders as well as the economy as a whole.7.4 The Insolvency process should be overseen by a neutral forum in a non-intrusive manner.6.2 Corporate insolvency should be addressed in the Company Law.
If you are faced with insolvency, either as a director, shareholder or as a creditor, Crowe’s insolvency services team can provide practical guidance and support, advising you of your rights, duties and responsibilities and the correct procedures and course of action you need to take.Where revival / rehabilitation is demonstrated as not being feasible, winding up should be resorted to.7.2 Where circumstances justify, the process should allow for easy conversion of proceedings from one procedure to another.In such cases it is possible for the productivity of the enterprise to be restored at a low cost and without attendant trauma for the stakeholders by providing more capable managerial talent an opportunity to run it.In fact recent times have shown possibility of growth by entrepreneurs, some of them Indian, who have become dominant business entities internationally by achieving turnaround of sick firms and revitalization of dormant capacities. The Indian system provides neither an opportunity for speedy and effective rehabilitation nor for an efficient exit.
This will provide opportunity to businesses in liquidation to turnaround wherever possible.