Recession dilemma

After the advent of the so-called man-made recession, many companies have gone burst without leaving any trace of their existence and thus leaving behind huge liabilities unsettled to their rightful, unsuspecting creditors.

By J S A Bukhari, By Email

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Published: Sun 24 Mar 2013, 8:53 PM

Last updated: Sat 4 Apr 2015, 7:48 AM

It is sad that these creditors too did not have a small clue as to what led to the disappearance of many companies and whereabouts of their proud owners.

While the debtors are generally smart enough to go unpunished by leaving the country unnoticed, the creditors usually come under pressure and eventually follow their debtors’ footsteps thus passing on the same bug, in a vicious circle, to each company in the list of successive creditors in a sort of chain reaction, ultimately leaving everyone in the lurch.

Even when the genuinely operating companies decide to wind up or sell their businesses or make changes in the activities or shareholding structure, in the absence of clear laws in place to that effect, they too do not care to inform of such decisions or actions to all parties dealing with them. If those parties are luckier at all, they could come to know about the changes by reading the advertisements in local newspapers (which again are not compulsory for all the changes made to the trade licenses) but in practice, we know, it does not happen.

Authorities, apart from bringing necessary regulations to protect the interests of the third parties, can also make it mandatory on the part of those companies wanting to make any of the above changes to send proper communication to all the parties dealing with them by registered posts, couriers or such other officially recognised modes of communication instead of merely releasing advertisements in the local newspapers. This step can go a long way in stabilising the market with lesser surprises to the business community.

Additionally, the authorities can make particulars of the trade licences of any registered organisation easily accessible on line to any genuine party wanting to have latest information on the legal status and other details of the such organisations on payment of a very nominal fee.

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