Every year, about one out of every 12 businesses closes down for good. Some of them do it simply because the people who own them don’t want to run them anymore.
But there are also times when a business owner will pretty much have no choice but to shut their company down. The company won’t be bringing in enough money, and it’ll put them in a position where they can’t continue to do business.
At this time, a business will have to go through what is called company liquidation. The liquidation process allows a company to liquidate all of its assets so that it can pay back its creditors and fulfill its financial obligations before eventually going out of business.
If your business is on the brink of going bankrupt, you should learn more about voluntary liquidation and see how it works. It could help you make the most of a tough situation.
Discover more about the liquidation process below.
Start by Seeing If There Is Any Way to Keep Your Business Afloat
Before you begin the company liquidation process, you should take a look at the numbers to see if there is any possible way to keep your business going. With a little luck, you might be able to find a solution to your financial issues.
For example, you might be able to get some of your creditors to accept less than what you owe them. This could cut down on your debt as a whole and make the idea of moving forward with your company more manageable.
If you get to the point where you’re considering company liquidation, it might already be too late for this. But it wouldn’t be the worst idea in the world to explore every potential solution to your problem.
Come to Terms With the Fact That Your Company Is Closing Down
If you run the numbers and realize that there just isn’t a way to save your business, you should try not to go kicking and screaming into the night. You should instead make peace with the fact that your company is closing down and do what you can to make the company liquidation process go smoothly.
It’s better to make company voluntary arrangements than it is to be forced to close your business down. You’ll be able to maintain some semblance of control as you set out to do right by your creditors while bringing your company’s operations to a halt.
Advise Your Company’s Creditors About Your Voluntary Liquidation
If you’re going to proceed with a company liquidation, you should make sure that all your shareholders are on board if you have any. You should also make it a point to let your creditors know that you’re going down this path.
Your creditors are already going to be calling you over and over again in the hopes of getting you to pay off your debt to them. So it shouldn’t be too difficult to fill them in on what’s happening. It’ll ensure that you’re on the same page as them as you inch your way through the company liquidation process.
Get Help With Liquidating Your Company’s Assets
You should shy away from trying to liquidate your company’s assets on your own. Rather than going this route, you should bring in a company that can extend liquidation services to you.
A company like this is technically going to work on behalf of your creditors as opposed to your company. They’re going to take all your business assets, get top dollar for them, and help your creditors to get as much money as they can.
This is going to satisfy your creditors more than you liquidating your own assets will. They’ll feel more confident in a liquidation company’s ability to get the most money possible for your assets.
Repay Your Company’s Creditors One at a Time
After you’ve liquidated all of your company’s assets, you’ll need to use whatever money you were able to make to repay your creditors. But you won’t want to just randomly start sending out checks to every creditor that you owe money to.
You’ll instead need to follow the statutory hierarchy of repayment. It’ll guarantee that the right creditors get paid in a timely fashion. This is another thing that a liquidation company should be able to assist you with when you’re moving through the liquidation process.
Dissolve Your Company Once and For All
Once you’ve sold off all your company’s assets and used the proceeds to pay off your creditors, your business will be left with nothing. It’ll be like you didn’t ever even have a business at all.
You’ll be free to officially dissolve your company. You can do this by:
- Closing your headquarters
- Shutting down your website
- Taking down your social media pages
- Advising your clients and/or customers about your company going out of business
It’ll be a sad day for you and your business. But you’re also going to feel the weight of the world lifted off your shoulders to some degree. You aren’t going to have to worry about trying to salvage your business anymore after it has been dissolved.
The Company Liquidation Process Doesn’t Have to Be Too Painful
As you can probably imagine, the company liquidation process isn’t all that much fun. You’re going to be under your fair share of stress when you’re liquidating your company.
But as long as you work with the right liquidation company, you should be able to get the situation under control and keep your creditors at least somewhat happy. You should also be able to close down your business without wasting too much time.
Follow the steps listed here to get the job done. It shouldn’t be too long before you’re parting ways with your business for good and starting the next chapter in your life.
Check out the other articles on our blog for more tips on shutting down a business that isn’t bringing in enough money.
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