If you are planning to run or start a new business, besides profit making strategies, you will also need to think about what you need to do if your business suffers substantial losses. In such unfortunate cases, liquidating a business would be the last and the best option to go for. Company liquidation is the best available solution to dispose of your business properly and formally. Liquidating a business voluntarily would be a good solution in comparison to facing the wrath of the creditors.
What is business liquidation?
One can opt to liquidate a business in a situation when the company is suffering heavy losses or nearing bankruptcy. In the liquidation procedure, the company assets are sold and the received cash is used to repay corporate debts and other liabilities of the creditors.
Repayment is generally carried out on a priority basis. Assets that are often sold include machinery, tools, equipment, inventory, furniture and real estate.
Business liquidation is not a process that can be completed overnight. It requires different considerations and appropriate planning from all parties involved in running the business and the management. Usually, business liquidation is the last step taken to close a business.
So, if you are unable to run your business smoothly and efficiently, opting for business liquidation may be your best option.
Many business owners have to opt for liquidation because of a major financial crisis. However, many other reasons might also compel you to choose this particular path. Whatever the reason for liquidation, you need to do certain things to ensure that the procedure takes place smoothly.
Furniture items and office equipment
You should evaluate the value of your office equipment. Keep in mind that all office accessories have certain value irrespective of the age. However, you need to understand the current value of you office furniture items. A skilled liquidator will help you in the process. He or she will assess the overall value of the items.
Stop ordering new inventory
You should stop ordering new inventory as and when you take the decision of dissolving the organisation. The main aim of liquidation is to get rid of all the office equipment instead of adding new inventory.
Return the items
You can also return unused items back to suppliers. Some suppliers will refund the full amount when returning certain items. In some instances suppliers might offer a credit note instead of a monetary refund.
Sell your assets
The next step is to sell off all your assets. You can do this via an online-sale or auction. However, it is best to leave this task to a proficient liquidator. If you want to speed up the process then you can also discount your assets to sell them at a faster rate. In addition, advertising the liquidation can get a better response.
All the above mentioned factors form an important part of the liquidation process.
Liquidation has become common in the current economic scenario. A major financial crisis, downsizing or shifting to a more economical space are some of the reasons for choosing company liquidation. Here are some ways in which you can get the most out of liquidation.
Liquidation of your Furniture Assets
Office furniture is always a major expense. Office furniture items like chairs and desks cost quite a lot. However, you might end up getting less for your office furniture items while liquidating your assets if you choose an inefficient liquidator. A skilled liquidator will consider several factors while liquidating your furniture items.
You should firstly understand the way in which the firm is going to liquidate your items before arriving at a decision. A good liquidator will consider several factors before reaching any conclusions. Some of the facts that the liquidator should look into are as follows:
Age
The liquidator will firstly check the age of the furniture. Age plays an important role in determining the value of the furniture.
Colour and Size
Colours also determine the value of the furniture accessory. Attractive looking furniture accessories will certainly get you more than dull and drab furniture. Similarly, the size of the furniture can affect the value.
Put a little thought into company liquidation and get the best deal possible.
Most people consider liquidation as the premature end of a business. On the contrary, company liquidation or business liquidation can prove to be a new beginning. Therefore, it is recommended that you get familiar with the different types of liquidation processes so that you can deal with the process a lot more easily.
What is voluntary liquidation?
This particular liquidation process is initiated by the company directors. Quite often, shutting down the company is the only viable solution left when an organisation cannot succeed in a highly competitive market.
Therefore, in this case, the company directors will decide to liquidate the company. However, the approval of the shareholders is required before doing so. They will then appoint a liquidator to carry out the entire liquidation process.
After filing for liquidation, the liquidator will evaluate the assets of the company. The liquidator will then sell off the assets so that the company can pay off any pending debts to creditors. This means that the selection of an efficient liquidator or liquidation firm plays an important role in the success of the voluntary liquidation process.
Compulsory liquidation:
Compulsory liquidation is a little more complicated than voluntary liquidation. In this type of liquidation, the creditors file a petition in court to close the company. The group of directors can also file a petition in court. The company can also make an appeal against this petition within a stipulated time-period.
Business liquidation is a process where a company or a part of a company is closed down. Nowadays, business liquidation is also known as dissolution, but it is only the last stage of the liquidation process.
Liquidation occurs not only in the case of bankruptcy, but also as many businesses sell in order to create funds. Business liquidation is mainly divided into two categories, which are:
• Voluntary business liquidation
• Compulsory business liquidation
Here is some information about voluntary liquidation:
Voluntary liquidation is a form of liquidation which is initiated by the directors and shareholders of a company. This step is taken when they think that their company is not profitable and sustainable. If the company has enough assets to pay off its debts to the creditors then it is known as Members voluntary liquidation. On the other hand, when the company’s assets are not enough to pay off debts then it is known as Insolvent voluntary liquidation.
In the case of insolvent liquidation, the directors have to meet a licensed insolvency practitioner, who is also known as a professional liquidator. This liquidator helps in arranging meetings with creditors and shareholders. This will help the company to choose an alternative way to pay off creditors.
The professional will also deal with all the legal formalities which are involved in business liquidation.
When companies are unable to repay debts from their own resources, it often means that it is the end of the company. In present economic conditions, many companies have found it difficult to keep their businesses afloat. Due to this, they fall behind with payments to creditors and eventually become insolvent. As insolvent companies usually do not have much of a future, it then becomes necessary to close down the business completely.
The need for company liquidation
During these times, opting for company liquidation is the best idea. With company liquidation, company owners can close down their business in an easy way. This process can be beneficial as it provides company owners with finances to pay off any outstanding debts. However, to ensure company liquidation is carried out properly, it is important to appoint professional liquidators to oversee the entire process. This can offer many advantages to the company and its owners.
One of the main reasons to hire liquidators is that excess inventory will be translated to immediate cash. Also, with professional liquidators, you don’t have to worry about excess inventory adversely affecting regular distribution channels.
In addition to all this, you can be sure of getting the right value from your inventory when experienced liquidators are taking care of the process. All these reasons make hiring liquidators the best way to close down an unsuccessful business.
Liquidation is a process which is undertaken by many companies all over the world in order to repay their debts. Under this process, the owners or shareholders sell the real assets of their business. At present, you will find two different types of business liquidation, which are voluntary liquidation and compulsory liquidation.
Compulsory liquidation
This type of liquidation is ordered by a court and goes into action when a company fails to pay its debts. The court appoints an officer who will handle the case and ensure that procedure is completed appropriately. As soon as the assets are sold, the money is distributed amongst the debtors.
Voluntary liquidation
Unlike compulsory liquidation, voluntary liquidation takes place when the business owners or shareholders decide to sell their assets and repay debts. Other than this, there are many other reasons which can lead to voluntary liquidation. In some cases, when all the debtors are paid, the remaining money is distributed amongst the shareholders.
If you are planning to undergo business liquidation then you can opt for liquidators who will help you to sell your assets at reasonable rates, in addition helping you to pay off your debtors.
So, if you are facing financial difficulties, it is recommended to settle your debts through voluntary liquidation before the court orders compulsory liquidation.
Regardless of whether you have an unknown small company or a large established one, facing financial difficulties is very common. In fact, many companies struggle with these problems due to unfavourable economic conditions or outstanding debts. Long periods of financial trouble can eventually lead a company to bankruptcy. At these times, the directors of the company may decide that it is best to end the business completely. This decision is more popularly known as voluntary liquidation.
How does voluntary liquidation work?
Voluntary liquidation involves the creditors of a company agreeing to liquidate the company and its assets. The money obtained from this process is distributed between them or used in other ways. Creditors usually go about this process by first appointing an insolvency practitioner who ensures the company’s assets are valued at the right prices and are then bought by the highest bidder.
Start a brand new business
Sometimes, existing directors from the company can bid for certain assets that can be reused. This allows the directors to set up a new company and start trading afresh without being burdened by debts from the old company. This is one of the best features of voluntary liquidation and it can work extremely well for some companies.
When opting for voluntary liquidation, or any other type of liquidation for that matter, it is essential that companies choose reliable liquidators from professional companies.
Liquidation is a common process that is used to deal with business closure and bankruptcy. Because of the many pitfalls in this process it is advisable to use a liquidation company as they will be able to ensure that the business is closed down in the most economical manner.
The following are some reasons why you might need the services of a skilled liquidation firm.
Getting rid of stagnant inventory
Excess inventory is commonly found in all types of businesses. Merchandise or products which cannot be sold usually end up lying around at the warehouse. These products end up occupying space and hence adding to the maintenance cost. A liquidation firm will help you get rid of this inventory and convert it into capital.
Brand name
It is essential that the liquidation process should be followed in such a way that it does not affect the image of the company in any manner. The liquidation company will thus ensure that the assets are sold off in the secondary market efficiently. They will also handle the marketing and advertising tasks while selling off the assets.
Immediate cash
This is a major benefit of using the services of a liquidation firm. They will convert your inventory into cash. They will also ensure that your assets are sold off without any sort of depreciation to their overall value.
Therefore, a liquidation company can help you immensely during the liquidation process.
If you run your own business then it is advisable that you become acquainted with the process of liquidation. Liquidation is a commonly used method to dissolve a company amicably during a crisis or downfall. In this process, the assets of the company are sold off to pay off any pending debts. Compulsory liquidation is an important part of the liquidation process.
Compulsory liquidation
As the name suggests, this liquidation process is related to the compulsory liquidation of any organisation which cannot resolve its pending debts. Therefore, a petition can be lodged for compulsory liquidation. This type of petition is usually lodged by the main company or a creditor.
The following are some of the situations in which a petition for compulsory liquidation is filed.
Compulsory liquidation is filed whenever the company cannot achieve the set targets before the stipulated time period. In addition, the concerned members might also file for liquidation when the total number of members does not meet the limit specified by the statute. However, debt related issues are the major reason for filing a petition for compulsory liquidation. This particular liquidation is usually caused by a major financial crisis. Sometimes, it is also beneficial to wind up a company if it has reached maturity.
The final verdict
After filing for compulsory liquidation, the court decides whether to pass the verdict to wind up the organisation. During this procedure, the court will appoint liquidators to follow up the winding up process.