Liquidation is a process through which a business is brought to an end. In this process, all the company assets are sold off and the earnings are then used to pay off the creditors. Liquidation is also often called dissolution or winding up a business. Usually, liquidation is a great solution for businesses that are unable to repay their outstanding debts.
As a result of the liquidation process, the creditors take complete control of the company assets, and sell them off to recover the maximum amount possible. The first priority of whatever is sold off is to pay off creditors, the remainder of which is given to the shareholders.
When a company needs to be liquidated, there are a few steps you need to follow:
Finding a liquidator:
You cannot just liquidate your company by yourself, so you need to enlist the services of a professional liquidation company.
Decide whether you want to continue your business or not:
If you want to continue with your business, this will have an effect on the liquidation process.
Passing the details of your assets on:
You need to pass all the details of your assets to the liquidation company, who will then get this valued. This will set the price of your possessions if you wish to go auction.
Chair meeting of the creditors:
This is the final step in which a meeting of the creditors is held to approve the liquidation of your company.
Liquidating a business needn’t be an overly stressful task, provided you follow a few simple steps.