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WDPG App 10.1 Assessing the adequacy of resources

WDPG App 10.1.1 G

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.