Business Advice
Disadvantages of dissolution of a company
Dissolution of a company is not always the best option for a business organization. First, the law requires that the creditors of the company must be duly informed and only their consent mean progress with dissolution. They may reject the move even if it seems the only remaining solution. Another big disadvantage of dissolution is that business liquidators, shareholders, or creditors can move to console the company for up to 20 years of dissolution. However, that may only happen if the following take place:
In case a notice that was sent to the creditors of the company was given incorrectly or was insufficient
It is known that the company could have been trading during the three months prior to application for dissolution
Another reason is if it becomes apparent that unjust action, fraud or misfeasance was committed by the company or some of its directors at the time when the company was in dissolution. Dissolution is also a costly venture because you must pay the business liquidators you hired as well as other costs like advertisement for the sale of the company assets.
