The first and most important goal for a new entrepreneur would be to see his business succeed. Such entrepreneurs focus their strategies on growing their business, increasing sales, and recruiting new investors. Starting a firm without an exit strategy, on the other hand, is a symptom of a poor business plan. You must know when and how to shut down your business, or you will become a victim of unforeseen circumstances. Read ahead to know further about it:
The online shopping platform Dubai Sprii has been placed in liquidation. The company was founded in 2014 by CEO Sarah Jones and is based in Jumeirah Lake Towers. It started with just two employees around a kitchen table and grew into a multi-million dollar business.
The platform began as Mini Exchange and was renamed Sprii in 2017. In the United Arab Emirates, Kuwait, Oman, Bahrain, and Saudi Arabia, it sells many baby and mother products. For at least two months, Dubai Sprii has been unable to pay its vendors. According to the letter, the Liquidator conducts an immediate financial review to launch an accelerated sales campaign.
“As a result of our inability to secure more financing to support the continuous trading of Sprii, coupled with an unsuccessful attempt to sell the firm, I have been obliged to take substantial decisions that will influence the future of the business,” Jones wrote in a letter to suppliers.
“Today is a sad day for all Sprii stakeholders. If a business sale is not possible, I will continue to work hard to resettle our whole crew. I understand that many of you will be hurting as well, but I will work relentlessly with the Liquidator to provide the greatest possible outcome for all creditors”, Jones wrote further in her letter.
Another supplier of Dubai Sprii told Arabian Business that “the user-at-any-cost business didn’t seem very sustainable to anyone. It was all about market share, and there didn’t appear to be enough margins for anyone to profit”.
WHY IS IT THE BEST EXIT STRATEGY?
In basic terms, liquidation means the company’s operations being ended and its assets being distributed to creditors. Company liquidation has recently gained popularity in the UAE, notably in the aftermath of the COVID-19 outbreak. Due to cash flow concerns caused by the pandemic, companies such as Dubai Sprii, Gulf Greetings LLC, and Arabtec chose to liquidate in the UAE. Because of the criteria listed below, all of these companies determined that liquidation was the best exit route.
Reduce Debt Repayments
Liquidation allows you to close your business without having to repay a large amount of debt. Some debts may be forgiven, and the rest may be settled through the sale of assets, depending on your circumstances. Because you may pay your creditors through asset sales, company liquidation in the UAE is a viable exit strategy for you.
Protection From Legal Action
Any legal action against the firm will be halted once you select a company liquidator to wind up your UAE business. Once the liquidation process begins, creditors will not sue administrators or directors for outstanding debts. However, this is true only if you have no personal accountability for the company’s obligations. To wind up the company smoothly, hire licensed corporate liquidators in Dubai.
Owners Don’t Supervise The Liquidation Process.
The owners, directors, or shareholders of a company in the UAE do not have to be present during the liquidation process. When the board votes to appoint a liquidator, the board’s power is transferred to the Liquidator. Company liquidators in the UAE will complete the process of dissolving the business without causing any inconvenience to the owners or directors.
Ability To Terminate Lease Agreements Easily.
Company liquidation is regarded as an intelligent exit strategy because it reduces debt obligations and allows you to stop making future payments. Most lease or hire-purchase arrangements will be dissolved when you start company liquidation in Dubai. It means you are no longer responsible for any further payments that were a part of your initial agreement. The best corporate liquidators in Dubai can handle the liquidation procedure for you, allowing you to cancel leasing agreements easily.
Employees’ Rights Are Protected By Liquidation.
Employees are entitled to compensation for redundancy under UAE labor legislation, according to Article 115. Your UAE company liquidation specialist will investigate the situation to ensure that the employees receive outstanding salaries and benefits after the assets are sold.