Before things with recession get better, they will first get even worse. The recession is causing companies to prematurely reach their natural end: cease their business. But this is just a beginning of a long way down. The worst of the recession is yet to come. There are reports of huge rise in companies going bankrupt as a direct result of the economic downturn. Even the whole countries went bust or went to the wall. While the term go bankrupt is the most common way used for saying that companies are going out of business or closing down and bringing their operations to an end, going bust and going to the wall are just more informal expressions with the same end result. No business sector seems to be spared and the boss of software giant Oracle has told the BBC that he expects thousands of small tech companies to go bust. Not only companies and countries, but individuals who lived beyond their means will also have to declare their personal bankruptcy. Go under is yet another informal expression describing a financial failure of a business. As the economic downturn causes more companies to go under and jobs to be lost, fears of more defaults make banks reluctant to extend loans.
Winding up of a company is a legal term which describes the last phase in the dissolution of an insolvent company in which accounts are settled and assets are liquidated so that they may be distributed and the business may be terminated. In this way all legal and financial affairs of the business are wound up. In its more general use winding up simply means to bring something to an end as in I think it’s about time we wound this meeting up. By going into liquidation, the company will turn over its assets and accounts to a trustee in bankruptcy. Liquidation is thus the end stage of the insolvency process. This process means selling a company’s assets and distributing the proceeds to meet current liabilities and claims of creditors. The company which is faced with serious insolvency problems can file for bankruptcy but if it fails to do so its creditors might start bankruptcy proceedings by filing a petition to the court. In that case, the sale and distribution of a debtor’s assets can be forced by a court order. In that case we are talking about compulsory rather than voluntary liquidation.
