The Effect of Power of Attorney During Liquidation

A Power of Attorney document lets others handle your liquidation.

At times, it is necessary to liquidate businesses due to financial insolvency, heavy debts, or simply because the owner wishes to disband the enterprise. A Power of Attorney document is a tool that can assist in liquidation.

Positive

The person named in the document is given the right to represent the owner's financial interests if the latter is unwilling or unable to do so. Several positive aspects exist when it comes to having such a form. It can be a very stress-relieving practice, as the named party handles financial matters that might otherwise prove too taxing for a burdened business owner.

Negative

Utilizing a Power of Attorney form is not without its drawbacks, however. Poorly crafted ones have the ability to relinquishes control over certain financial matters that the owner did not intend. This can pave the way for unscrupulous parties named in the document to take advantage of their powerful position.

Considerations

When crafting a Power of Attorney, it is important to name a party you can trust to handle the liquidation. If he or she has experience in buying and selling businesses, this is also an important aspect to consider.

References

• "Powers of Attorney Simplified;" Dan Sitarz; 2007