Success for the company would be the primary objective of every new business owner. For these company owners, it’s all about expansion, whether that means opening more locations or bringing on board more financial backers. However, failing to consider an exit strategy before launching a company is a sign of inexperience. If you don’t know when and how to close shop, you might end up losing money due to a sudden downturn. Keep reading to learn more:
Due to financial difficulties, Dubai Sprii, an online shopping portal, has been liquidated. Sarah Jones, who also serves as CEO, established the firm in 2014 at Jumeirah Lake Towers. Two people founded the company at a kitchen table, and now it employs hundreds and generates millions annually.
When it was launched in 2013, the site was called Mini Exchange; in 2017, it was rebranded as Sprii. Many baby and mother items are sold in the United Arab Emirates, Kuwait, Oman, Bahrain, and Saudi Arabia. It’s been at least two months since Dubai Sprii was able to pay its suppliers. The letter instructs the Liquidator to immediately assess the financials and begin an expedited sales drive.
In a letter to vendors, Jones said that “I have been required to take important choices that will effect the future of the business” because of the company’s “inability to get sufficient finance to sustain the continuing trading of Sprii” and an aborted effort to sell the company.
Today is a day of great sadness for everyone invested in Sprii. In the event that the company cannot be sold, I will keep pushing through with plans to relocate the whole team. I know many of you will be suffering as well, but rest assured that I will be working tirelessly with the Liquidator to get the best possible conclusion for all creditors”, Jones said in her letter.
‘The user-at-any-cost business didn’t seem very viable to anybody,’ another Dubai Sprii vendor told Arabian Business. It was a cutthroat competition for market share with narrow profit margins.
WHY IS IT THE BEST EXIT STRATEGY
Liquidation, in its most basic form, is the cessation of business activities and the distribution of remaining assets to unsecured creditors. In the wake of the COVID-19 pandemic, company liquidation has gained appeal in the United Arab Emirates. Companies in the UAE, such as Dubai Sprii, Gulf Greetings LLC, and Arabtec, liquidated because of cash flow issues brought on by the epidemic. All of these businesses ultimately decided that liquidation was their best way out due to the factors discussed below.
Reduce Debt Repayments
Liquidation is a way to wind down a company without being saddled with a lot of costs. In some situations, you may be able to have some of your obligations discharged, while using the proceeds from the sale of your assets to pay off the remainder. Company liquidation in the UAE is an option if you can satisfy your debtors via the sale of assets.
Owners Don’t Supervise The Liquidation Process
In the United Arab Emirates, a company’s owners, directors, or shareholders are not need to be physically present throughout the liquidation process. When the board of directors approves the appointment of a liquidator, all authority rests with that individual. Liquidators in the United Arab Emirates will wind down the company with little disruption to its owners and directors.
Protection From Legal Action
Once you appoint a corporate liquidator to wind down your UAE business, any pending litigation will be stayed. Creditors are barred from suing administrators or directors for unpaid obligations after the liquidation procedure has begun. This, however, is only correct if you are shielded from any personal liability for the debts of the firm. To ensure a seamless closure of operations, it is recommended that you use the services of corporate liquidators in Dubai.
Ability To Terminate Lease Agreements Easily
Liquidating a business is a smart way out of a business since it decreases your debt and releases you from further payments. When you start the process of liquidating your Dubai-based firm, most lease or hire-purchase agreements will be terminated. When this happens, you are released from additional financial obligations under the terms of the original contract. If you choose one of the top corporate liquidators in Dubai, they will take care of the liquidation process on your behalf, enabling you to terminate any leases with no hassle.
Employees’ Rights Are Protected By Liquidation
According to Article 115 of the UAE Labor Law, workers are eligible for severance pay in the event of layoff. After the firm’s assets are sold, your UAE company liquidation expert will look into the matter to make sure the workers are paid in full.