I’ve seen large private companies die, and it’s not pretty. At one place I worked, the company struggled for years because of mismanagement. Finally, at the end, the two main shareholders—the CEO and the GM—counted up the cash receipts the day before payday and realized that they didn’t have near enough money to cover the bills.
They faxed all their offices with instructions to post notices on their doors saying they were closed for good but leaving no contact information, stuffed all the cash in their pockets, turned off the lights, and went home. Employees didn’t discover they had been laid off until they went to work the next day to find a locked door with the notice.
It was cold. It was horrible. But it was typical, because all along the owners only ever cared about themselves and the money they could make, even while running the company into the ground.
One reason for the company's financial issue were that the two main shareholders always paid their own dividend--20% of the gross--before they paid the payroll or other bills.
One reason for the company's financial issue were that the two main shareholders always paid their own dividend--20% of the gross--before they paid the payroll or other bills. This left them constantly juggling to meet their financial obligations. No doubt to protect themselves, towards the end they were using cash to pay employees.
Knowing their payroll costs, I estimate that they had about 1/2 million dollars in cash on the table when they decided to close.
No money was ever recovered from them--employees were never paid their final paychecks. The owners' wealth was no doubt hidden in some offshore bank account.