There is really no simple answer to when a board of directors should take the difficult decision to wind up their company. The closest we can get is - when the company is insolvent, cannot pay its creditors and has no realistic way of trading out of its financial difficulties.
The danger is that directors will allow their company to continue trading long after this point, creditors build up to totally unmanageable proportions and the directors run the risk of becoming personally liable for the company's debts and become vulnerable to being disqualified to act as a director in the future.
There is also a more human aspect to all of this. If business worries are causing directors to have sleepless nights then it is probably time to bring in an expert to advise you and your company. After all a problem shared is a problem halved. That advice might be that things are not as bad as you think and that a turnaround is feasible or it might be that the situation is hopeless and you should stop trading at once. Either way it should help you stand back and see the wood from the trees.
As business rescue and insolvency specialists we provide exactly this kind of advice every day. If you are concerned about your company click here to arrange a free 30 minute no obligation consultation. Otherwise order our complimentary self help book from the Pocket Lawyer series on Corporate Insolvency.
If you would like to know more about our turnaround or insolvency services for businesses or individuals or wish to discuss any specific issues concerning underperforming businesses please contact me. We are happy to have an initial confidential and charge free meeting either face to face, on or off your premises or over the telephone. For further information telephone 0800 331 7417