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WDPG App 10.1 Assessing the adequacy of resources

WDPG App 10.1.1G

1A firm may take into account the following to assess if it would have adequate resources to carry out an orderly wind-down:

  1. (1)

    A firm needs to have adequate financial and non-financial resources. A firm that leaves making the decision to wind down until it is too late risks breaching regulatory requirements, engaging in a disorderly wind-down, or even operating illegally while insolvent.

  2. (2)

    Whether the firm has sufficient cash to meet monthly expenses during the wind-down period.

  3. (3)

    The level of non-financial resources that are needed for wind-down and whether they are in place.

    Effective

    Less effective

    Consider which key employees will be needed for an orderly wind-down but may want to leave the firm after the wind-down decision is made. An additional allowance to retain these employees during the wind-down period may be needed.

    The firm only assesses its capital adequacy, and fails to assess its ability to meet monthly expenses during the wind-down period.