Liquidating a business
As a director of an insolvent company, you are at risk if you do not act.This risk RISES the longer you don't act to put the company into liquidation.As well as normal audit procedures, liquidation audits will focus on these additional issues: 1.The financial performance and transactions of the company for the last three years before the date of declaring liquidation. The completeness and truth of information on assets, such as: After payments have been made in accordance with provisions above and upon completion of the liquidation procedures, the remaining revenue shall be converted into U. dollars, or any other foreign currency acceptable to the investor through a designated foreign exchange bank or any other method permitted by PRC Law, and can be freely remitted or transported abroad.The action described above can be regarded as wrongful trading; if a liquidator can prove there was wrongful trading then, you are at much increased personal risk. A classic example of wrongful trading is taking credit from a supplier or taking deposits from customers when you know that it is unlikely that you can pay them back.Voluntary liquidation is the quickest most efficient way to deal with an insolvent company that has no future.Market value is generally the highest value of assets, though it could be lower than book value if the value of the assets has gone down in value due to market demand rather than business use.The book value is the value of the asset as listed on the balance sheet.
Liquidation value is determined by assets such as real estate, fixtures, equipment and inventory.Each level of value provides a way for accountants and analysts to classify the aggregate value of assets.Liquidation value is especially important for those that work with bankruptcies and workouts.In this article, we explain the procedures you would need to go through to close a foreign invested enterprise in China, and highlight the many related issues that you will need to address.Company law and the liquidation process The procedures for closing a wholly foreign-owned enterprise (WFOE) – its dissolution and liquidation – are no easier or shorter than the process of setting up such a company, and normally take between 12 to 14 months to complete.