The business world is highly unpredictable, with various factors determining success or failure. Do you manage a business and are considering liquidation to resolve challenges? Understanding the essentials can help you make the right decisions and prepare for the process.
What is business liquidation?
Business liquidation is the selling of a company’s assets due to various circumstances, resulting in the eventual closing down of the company. Perhaps, your company has run into financial difficulties and cannot pay its debt. Maybe you simply want to retire or try out another venture. Whatever the reasons for closing up shop, business liquidation is a viable option.
Types of business liquidations
There are broadly two types of business liquidations:
Voluntary liquidation
This is when you or the company’s management team decide to close down the company due to several reasons. In a voluntary liquidation, you have more control over the process, and the outcome is much more favorable.
Compulsory liquidation
This is the forced closure of your business by order of a court of law. It usually occurs when creditors, lenders, or someone associated with the company petitions a court to interfere if their debts are not paid within a specific time.
The business liquidation process
After the decision to liquidate the business, either by the company’s directors or a court, the liquidation of assets typically follows the following process. Evaluation involves assessing the company’s assets, including inventorying and analyzing all tangible and intangible assets.
Valuation pertains to the process of determining the current market value of the assets. An accurate valuation is essential to determine the return for investors, creditors, and shareholders.
Auction is the marketing and disposal of the assets of the company. It is particularly crucial to work with a reputable auction house that will help maximize returns and minimize stress.
Settlement of debt involves the payment of outstanding debt and obligations to creditors, stakeholders, and other claiming parties.
Dissolution marks the closure of the company when it is officially deregistered.
Working with Magna Auction Company can make all the difference
Shutting down your company can be challenging and emotional. As you wind down your business activities, you want to sign out on a high note, not with a botched auction. Magna Auction Company can help out. We’ll work with attorneys, fiduciaries, insurance companies, financial institutions, and others to map out a plan, ensuring that your assets are sold for maximum returns. Get started today.