Lifecycle of a Business - Decline and Exit

BLM's Lifecycle of a Business series captures key elements of a business's growth story - from the highs of formation right through to lows of dissolution. Our experts’ advice and knowledge will help guide you to understand and deal with litigation risks. 

Whether you’re facing a decline caused by unfortunate commercial circumstances or a desire to wind-down the business without passing a business on to someone else, ensuring that the process is done properly will allow you to move on without the stress of anything arising in the future that had not been envisaged. If the company finds itself in a state of insolvency then that adds a layer of complexity that must be managed appropriately and contained to avoid repercussions outside of the company’s corporate structure. 

The advice of an insolvency practitioner may be appropriate in some circumstances to ensure that the company’s affairs are properly wound up and in order. There may also be an underlying dispute that has led to the business’s demise that requires a commercial resolution to enable all parties to move on.  Whatever the final acts may be for a business, it is certainly not a time in which the risk of litigation reduces. In fact due to the complicated nature in which business find themselves coming upon hard times, this stage of its life cycle may well be its most contentious, at a time when disputes may be the last thing that you want. Ensuring therefore that you are adequately prepared and advised for any such eventualities will help to minimise the disruption that litigation can cause. 

You may also find that there is remaining disagreement amongst shareholders or directors as to the reason for the decline of the business. This could be a significant dispute to resolve once there have been discussions about dissolving the business as doing so will inevitably impact each stakeholder in varying ways. Being able to bring matters to a conclusion amicably and adequately in this sort of situation will require professional advice and guidance as to the appropriate steps to take to meet your needs. Of course, in business there is always the potential for the conclusion of one commercial chapter to bring about the beginning of the next.

Disclaimer: This document does not present a complete or comprehensive statement of the law, nor does it constitute legal advice. It is intended only to highlight issues that may be of interest to clients of BLM. Specialist legal advice should always be sought in any particular case.

Who to contact

Stuart
Evans

Partner , London

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