Winding Up

DEFINITION of 'Winding Up'

The process of selling all the assets of a business, paying off creditors, distributing any remaining assets to the principals or parent company, and then dissolving the business. Winding up can refer to such a process either for a specific business line of a corporation or to the dissolution of a corporation itself.

Also known as liquidation.

BREAKING DOWN 'Winding Up'

The process of dissolving a corporation is much more involved than that of winding up one of its specific business lines, and generally only happens when it goes bankrupt. The negative impact to the local and regional economies of a corporation's wind up post-bankruptcy is likely to be more pronounced if the company is a large one. A large bankruptcy generally entails the layoffs of hundreds of employees, apart from having a detrimental impact on the finances and business of the company's suppliers and lenders.



A particular business line may occasionally be wound up by a company because of its diminishing prospects or minimal contribution to the parent company's bottom line. The parent company may decide to wind up such a business if efforts to find a buyer for it are unsuccessful. The winding up process in this case is likely to be more orderly, and have much less of a negative impact on the economy, than a corporate winding up.

RELATED TERMS
  1. Bankruptcy

    A legal proceeding involving a person or business that is unable ...
  2. Creditor

    An entity (person or institution) that extends credit by giving ...
  3. Bankruptcy Risk

    The possibility that a company will be unable to meet its debt ...
  4. Chapter 11

    Named after the U.S. bankruptcy code 11, Chapter 11 is a form ...
  5. Liquidation

    Usually occurs when a company is insolvent, meaning it cannot ...
  6. Conglomerate

    A company that owns controlling stake in a number of smaller ...
Related Articles
  1. Markets

    How To Calculate A Z-Score

    Investors need to know how to detect signs of looming bankruptcy. The Z-score can help.
  2. Insurance

    Liquidity And Toxicity: Will TARP Fix The Financial System?

    TARP is the government's attempt to forestall a deep, extended recession. Will it work?
  3. Investing Basics

    Liquidation Blues: When Mutual Funds Close

    Underperforming funds often close their doors, leaving investors down and out.
  4. Bonds & Fixed Income

    Distressed Debt An Avenue To Profit In Corporate Bankruptcy

    Use debt securities to attack bankrupt companies and scavenge them for profits.
  5. Bonds & Fixed Income

    An Overview Of Corporate Bankruptcy

    If a company files for bankruptcy, stockholders have the most to lose. Find out why.
  6. Options & Futures

    Bank Failure: Will Your Assets Be Protected?

    The SIPC and FDIC insure against personal financial ruin when banks or brokerages go belly up.
  7. Economics

    The 2007-08 Financial Crisis In Review

    Subprime lenders began filing for bankruptcy in 2007 -- more than 25 during February and March, alone.
  8. Economics

    Lehman Brothers: The Largest Bankruptcy Filing Ever

    Lehman Brothers survived several crises, but the collapse of the U.S. housing market brought the company to its knees.
  9. Economics

    Why Enron Collapsed

    Enron’s collapse is a classic example of greed gone wrong.
  10. Stock Analysis

    From Shampoo to Soup, Unilever Has it Covered (UL)

    Open your fridge, your pantry, your bathroom cabinet and you'll find the Unilever logo. Here's how the company got so enormous.
RELATED FAQS
  1. How do I calculate the capital to risk weight assets ratio for a bank in Excel?

    Calculate a bank's capital to risk-weighted assets ratio in Microsoft Excel once you determine its tier 1 and tier 2 capital ... Read Full Answer >>
  2. What does it mean when a company has a high capital adequacy ratio?

    The capital adequacy ratio, also known as capital to risk-weighted assets ratio, measures a bank's financial strength by ... Read Full Answer >>
  3. Does working capital include stock?

    A certain portion of a company’s working capital is generally composed of earnings; however, current short-term assets that ... Read Full Answer >>
  4. What are some alternatives a company can attempt prior to resorting to liquidation?

    Some alternatives a company's owners can attempt prior to resorting to liquidation are selling the company, raising money ... Read Full Answer >>
  5. Under what circumstances might a company decide to liquidate?

    There are many reasons a company may decide to liquidate. A smaller company may decide to liquidate if one of the main owners ... Read Full Answer >>
  6. What happens to the shares of a company that has been liquidated?

    The fate of a liquidating company’s shares depends on the type of liquidation the company is undergoing. The most common ... Read Full Answer >>
Hot Definitions
  1. Socially Responsible Investment - SRI

    An investment that is considered socially responsible because of the nature of the business the company conducts. Common ...
  2. Presidential Election Cycle (Theory)

    A theory developed by Yale Hirsch that states that U.S. stock markets are weakest in the year following the election of a ...
  3. Super Bowl Indicator

    An indicator based on the belief that a Super Bowl win for a team from the old AFL (AFC division) foretells a decline in ...
  4. Flight To Quality

    The action of investors moving their capital away from riskier investments to the safest possible investment vehicles. This ...
  5. Discouraged Worker

    A person who is eligible for employment and is able to work, but is currently unemployed and has not attempted to find employment ...
  6. Ponzimonium

    After Bernard Madoff's $65 billion Ponzi scheme was revealed, many new (smaller-scale) Ponzi schemers became exposed. Ponzimonium ...
Trading Center