Level of service.

A quick rule of thumb is that the more problems you have at the moment, the higher level of service you will need. Ask yourself:

• Have we had any legal action against the company?
• How up to date are our books?
• Do we have assets to deal with?
• Are there any situations that might take a little ‘negotiating’?
• Do we want to be kept regularly informed?

All these things take a little time, and so you will need a higher level of service. What you don’t want is to start the liquidation process and then find your liquidator will not help you on an outstanding matter – leaving you to deal with the hassle yourself.

Gut Instincts

In real terms you won’t be spending a great deal of time with your Liquidator. This means that you do not get a lot of time to form any sort of association. Given the time-limited nature of the business relationship, it is usually best to go with your gut instincts regarding their character.

If you don’t feel comfortable talking to them from the outset, it doesn’t bode well for later on.

Understanding

Your position is unique, I can quite categorically say that no other company is in exactly the same situation as you are. In order that the Liquidation process is as effective as possible for you and your company, you need a Liquidator to understand your situation, and keep one eye on where you are planning to go on a business level.

One of the first jobs we do when instructed is to get any assets valued, this makes sure the Directors are not leaving themselves open to a legal headache further down the road.

If you are in a position where you can’t engage a liquidator’s services prior to Liquidation, then get a valuer in. They will tell you exactly how much your assets are worth.

Ownership of assets

Before selling any of your company’s assets please make sure you that you technically own them.  During a company’s Liquidation we are seeing more and more problems over people selling assets they never actually owned.

If you have taken out finance to purchase assets, you may want to check the details on your finance agreements as you may find that the finance is actually secured against the assets.  Until the finance is paid, you don’t own the assets.

The second thing to watch for is ‘retention of title’.  This basically means that when a supplier sells you an item, they retain the legal right of ownership until such a time as you have paid for the items.

In summary:

• Only sell assets that you own.
• Get any assets valued prior to selling them.
• Keep all sales documents.
• If in doubt, talk to your liquidator!

Dealing with personal guarantees once you have liquidated your company.

Much like any other creditors you may have, a creditor with a personal guarantee just wants their money back. It is quite probable that they will take a payment plan or a full and final settlement figure (you have just been made unemployed after all). If you are going to handle the negotiations yourself then always suggest bankruptcy is a very real prospect, creditors like to threaten it without thinking about the financial consequences to themselves.

Financial consequences of bankruptcy.

Bankruptcy has a financial consequence to everyone involved, both you and the creditors. Through bankruptcy the only realistic way of getting money in for creditors is through the sale of assets. Assets are sold at auction where they will typically sell for between 60-80% of market value.

Once your assets have been sold, the secured debts (such as mortgages) have to be paid. Anything left is then distributed between your creditors pro rata. When you crunch through the numbers you generally find this isn’t a great deal of money, and so the lender is much better accepting your initial offer.

In summary

• Be sensible about what you can afford to repay on your debts
• Remember that you have a strong position with regard to negotiations
• Compare any offer to what they will get under bankruptcy

Before the pre administration is started, you don’t need to consult your creditors. This is a major advantage to the company as creditors cannot block the move like they can do if you choose a company voluntary arrangement. Although the creditors cannot do anything, it does not mean that the company can do anything without the creditors’ consent. Companies need to keep the detailed records of the entire proceedings as they may need to give an explanation on why they opted for a pre-pack administration package.

Before the business is actually placed into administration, it is important to decide upon the exact details of the sale. Once all the required paper work is done, the administrators can carry out the sale of the business. As this process can be especially sensitive, it can potentially affect many other parties. This is why everything has to be well documented and transparent. If you fail to do this, it can lead to negative repercussions further down the line.

If you think pre pack administration is the best course of action for your company, you should get in touch with a company that specialises in the pre pack administration. Thus, the process of pre pack administration can be simplified greatly.

The business liquidation process

Liquidating a business is a sensitive process which requires careful consideration and adequate time. The first step in this process is to consult professional liquidators and a lawyer as they will help with the process. Company owners who are liquidating their business on account of debts may also have to contact their creditors. However, it is best to have a thorough business liquidation plan before approaching your creditor. This increases the chances of them supporting the plan.

Maintain an asset record

Once the business liquidation plan has been decided and agreed upon by creditors, company owners have to make a list of their assets that will be sold. It is important that all these assets are described in detail and have serial numbers attached. Ensuring your assets are in good condition is important if you want a good deal from the business liquidation process.

There are different ways to sell off a company’s assets. These include public auctions, sealed bidding, online sales and going-out-of business. When the assets have been sold, companies can pay off their creditors. If there is any money left over, it is split amongst the company’s owners.

You should maintain separate accounts if you are handling the business on the basis of a joint partnership. After dissolving you will need to submit a separate statement of affairs to the court. Remember that you cannot dispose any of the liquid assets during the liquidation process. Moreover, you also cannot sell the assets cheaply to any relatives or friends. You should then prepare a detailed list of the assets within the office. Ask the liquidator to review the assets and determine the value of the same.

Pay the creditors

This is an important factor to consider while dissolving your company. Any sort of pending debts should be paid off as soon as possible. However, pending debts can be paid off only after dissolving the company and selling the assets.

Employees

It is important to remember your employees during the liquidation process. There is a possibility that you may owe money to these employees. For instance, you might owe wages or salaries. Employees are also entitled to compensation during the liquidation process. Seek the help of a legal counselor regarding this process.

Consider the above mentioned factors and dissolve your business amicably without any problems.

Shutting down a business is certainly not an easy task and requires immaculate planning to avoid any additional problems. A well-thought-out plan will help in improving your chances of success. Following are some of the important points that need to be taken into consideration when terminating your business.

Consult your lawyer or liquidation consultant

Legal aid is essential when dissolving your company. He/she will advice you about the steps to be implemented when liquidating your business. Similarly, you should also seek the help of an expert liquidation consultant. A skilled liquidator will guide you along each and every step and help you in order to achieve the desired results.

Inspect your Assets

The liquidator will examine your assets in detail and estimate the value it is likely fetch after an auction or sale. Various factors such as the quality of the assets and age will be considered when evaluating your assets.

Choose a ‘Sale’ for your Merchandise

You can sell your items either online or via an auction. However, this task should be left to the liquidator. The liquidator will select an appropriate day and place for selling off the assets.

The above mentioned points form an important part of the business liquidation process.

If you are able to find the right liquidator for the job, the entire liquidation procedure can be less stressful. Although liquidators have control over winding up a company, it is important that they should be aware of your requirements. It is important to make sure that everything is discussed in the initial meeting and all problems are addressed properly.

In order to begin the liquidation process, you need to cease trading. You cannot continue to operate a business that is going into liquidation, particularly if it is insolvent. It you have already ordered any goods you should cancel them immediately. You also need to ensure that others are aware that your business is entering liquidation.

Liquidation is not just about the fiscal side of things, but also about the relationships between everyone involved in the business. As liquidation may result in staff members being made redundant, you might find it difficult liquidating your company. But, it is sometimes better to wipe the slate clean and start again rather than continuing with something that does not work.

How is company liquidation decided?

Company liquidation can be voluntary or compulsory. Compulsory liquidation is a decision to liquidate and close down a business which is taken by law. On the other hand, voluntary liquidation is decided by the management of the company if they agree that there are inadequate funds for daily transactions. Thus, company liquidation is decided upon depending on the situation and finances of the company.

How can company liquidation benefit businesses?

Through company liquidation, businesses can gain cash in an upfront method. This is because liquidators sell additional inventory and stock. The money obtained from here can then be used for better purposes. For instance, companies can use this money to buy fixed assets or fast selling stocks that can increase finances. The cash can also be used to pay off debts and employees.

With the benefits that company liquidation offers, there is little doubt that it is one of the best measures when closing down a company. However, it is important to get professional liquidators to handle the entire process if you want the best outcome from this procedure.

Pre-pack administration allows companies to resolve their insolvency issues while still allowing them to continue with business without much interruption. Through this process, the sale of the insolvent company can be arranged easily and quickly. An ideal feature of pre-pack administration is that it can be bought back by the owners of the original company as it becomes a new entity once the sale goes through.

While pre-pack administration seems like an ideal way for companies to close their business, it is necessary that the precise details of selling the business are decided before the company can actually be placed in administration. Since administrators can authorise sale of the business almost instantly, the company is left in administration for a short while. As this process is very sensitive and can affect different parties, it is important that it is documented completely and is carried out transparently.

There is no doubt that pre-pack administration can be beneficial for many companies. But owners should be aware that the process is usually only used in the company’s best interests and not to favour the directors of the company. Legal action can be taken against directors who use pre-pack administration for their own interests. For this reason, it is important to hire a professional liquidation company to handle the process.