Let’s define an Orderly Shutdown as a managed dissolution of the
company that involves discharging all the outstanding debts. The
shareholders may lose their stakes as the shares become
worthless, however, all the creditors are paid off before the
company is dissolved.
Following an orderly shutdown, you should be free to attempt
some form of restart or safely sail away to your next startup
and your next adventure.
For an orderly Shutdown you need 3 things: a shut down plan,
cash and time. If you leave it so late that you don’t have all 3
of these ingredients you may find yourself facing a Bankruptcy.
As the management team of Enron will attest, bankruptcies can be messy—very
messy. As a member of the board of directors or the management team, bankruptcy
could mean trouble.