Business liquidation can be used as an exit strategy when the business is under so much debt that it is close to bankruptcy. Liquidating your business normally means you sell your business and also sell off its assets. The money which is received after the sale of the business can then be used to pay off debts. If some money is left after money is given to the creditors then the money will be given to the owner or owners.
You need to be careful and take some factors in to consideration when liquating your business. Firstly, consult with a lawyer or an accountant and they will guide you through the process. Before liquidating, you need to speak to all the creditors to ensure that they are willing to support your plan.
Asset inventory - After the creditors agree with your plan then you can start to compile a list of all your assets. According to the advice of small business administration, you have to list all the assets in detail, even serial numbers.
Sell your assets – After preparing a list of all your assets, hire an appraiser. An appraiser will tell you the value of all your assets. There are several options for selling your assets which includes sealed bidding, online sales, public auctions and going out of business sales. You should consult your lawyer, as you need to follow the rules which govern the specific method of selling.
Lastly, after selling all your assets you can pay off your creditors and distribute the remaining money amongst the owners.