Defunct means no longer in effect or use; not operating or functioning: a defunct law; a defunct organization. No longer in existence; dead; extinct: a defunct person; a defunct tribe of Indians.
What is Defunct??
- Defunct, in a business context, refers to the condition of a company, whether publicly traded or private, that has gone bankrupt and ceased to exist. In general, “defunct” refers to something that does no longer exist, functioning, or in use. It may be used to describe laws and regulations, businesses, organizations, currencies, brands, practices and more. According to the Securities and Exchange Commission (SEC), the shares of a defunct company may continue to be traded until the company has the shares re-registered or until the stock’s registration has been revoked
- Defunct describes something that used to exist, but is now gone. A magazine that no longer publishes, like Sassy, the girl-power magazine from the ’90s, is defunct, for example. Although defunct comes from the Latin word defunctus meaning “dead,” it’s not usually used to describe a person who’s no longer with us, but rather institutions, projects, companies and political parties you know, the boring stuff. Keep digging and you’ll find that defunctus comes from defungi, meaning, “To finish,” which is closer to how it’s used today. Defunct can also refer to a rule or law that’s no longer used or has become inactive, like prohibition.
- Retailers should be cautious about targeting shoppers from defunct retailers, says Craig Johnson, president of Customer Growth Partners, a retail consultancy.
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Breaking Down ‘Defunct’
Companies may become defunct for a variety of reasons. For example, bankruptcy may lead a company to shutting down operations. Illegal activity or fraud may also cause a company to become defunct, as customers abandon it and its business prospects erode. Companies may also become defunct as a result of merger and acquisition activity, in which their operations, personnel, brands and trademarks are rolled into the acquiring company.
Defunct Companies: Trading Shares
The SEC (Securities and Exchange Commission) has no rule that prohibits the trading of a company’s stock once it has become defunct. It takes the position of not wanting to forbid transactions between willing buyers and sellers. That includes the shares of defunct companies. In the case of defunct public companies, their shares may still be traded even if they are not operating if there is still outstanding registered stock. The two actions that will stop trading of any stock, defunct company or not, is when a company DE-registers their stock or if the stock’s registration is revoked. Once that happens, a stock is dis-listed from the exchange, may no longer be traded and is worth nothing. For more, see “Defunct Company, Stock Continues to Trade” from the SEC, its rules on defunct companies as it relates to bankruptcy, which cover a variety of stock listing issues related to bankrupt and defunct companies.
Defunct Companies
Some well-known companies have become defunct. Some examples are:-
1) Enron: – Energy Company went bankrupt in 2001 after it was discovered that its financial reports were the product of massive accounting fraud.
2) Long-Term Capital Management: – Highly leveraged hedge fund that had financial luminaries on its board was bailed out in 1998 and then dissolved in 2000.
3) Tower Records: – Music mega-store chain went bankrupt in 2004.
4) Polaroid: – Instant photo Camera Company went bankrupt in 2001.
5) The Sharper Image: – Gadget retailer went bankrupt in 2008.
6) E.F. Hutton: – Brokerage that made famous the tagline “when E.F. Hutton talks, people listen” was acquired in 1987.
If we talk about defunct companies in India we have a current example as Kingfisher Airlines and many more e.g.
- Filmistan
- Hindustan Cables Limited
- Satyam Computer Services Limited
- Prabhat Film Company
- Mopeds India Limited
- Bharat Gold Mines Limited
- British Electric Traction Company
- Pandiyan Roadways Corporation Limited
Defunct Currencies
- “Defunct” may be applied to currencies that are no longer in circulation, such as the 19 European currencies that were retired with the adoption of the euro on Jan. 1, 1999. History has seen many defunct currencies (e.g. the Greek drachma and the Dutch guilder). Currencies can become defunct for many reasons. For example, due to political upheaval or revolution, or because the currency has become worthless in the foreign exchange market. For number reasons sometimes related to failure to file an annual report, sometimes related to punitive action, the certification of a corporation can be canceled by the government which initially issued it.
- In law, one will speak of a corporation as being “struck from the Register”. These companies are said to be defunct.
- Technology killing off corporate America: Average life span of companies under 20 years. The average age of an S&P 500 company is under 20 years, down from 60 years in the 1950s, according to Credit Issue. The Wall Street firm says the trend is accelerating and blames the disruption from technology
Closure:
It is the term used to refer to the actions necessary when it is no longer necessary or possible for a business or other organization to continue to operate? If an organization has debts that cannot be paid, it may be necessary to perform a liquidation of its assets.
Others:
- As 2017 draws to a close, the annual reckoning of which brands will disappear in the coming year is upon us. The fate of a brand depends on brand mismanagement, the whims of the marketplace, and the determination by corporate big-shots as to whether a brand stays or goes.
- Each year, 24/7 Wall St. identifies 10 American brands we predict will disappear in the coming year. Factors we consider include declining sales and losses; disclosure by the parent company it might discontinue the brand; rising costs that are unlikely to be recouped through higher prices; sales or mergers of companies; businesses that will likely go into bankruptcy, or from bankruptcy into liquidation; companies that have lost the great majority of their customers; and operations with dwindling market share.
- Most of these examples represent some failure, either in the company or the brand, or sometimes in both. Some of the brands on this list are already certain to disappear, with just the last remnants left to dissolve next year. Others are on their way to vanishing, though their destinies will depend on what happens next year.
- A now defunct mining company has been fined a record $1.3 million, but for employers in Ontario it is important to heed the warning: fines are, only occasionally does one hear of large life insurance companies in serious financial … out the guarantees provided in the policies issued by the defunct company.
- The provisions relating to Strike Off provide an opportunity to the defunct companies to get their names struck off from the records of the ROC.
- There has been speculation that an outsider would invest in The Weinstein Company. In November, two women-led investor groups expressed interest in buying the company. It is a much greater likelihood, though, that the company’s assets would be distributed in a clean and direct purchase.
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