It’s a tough economy right now, and you’re not the only one feeling it. Business has been slow for months now, but your company is now on the verge of bankruptcy after an unexpected downturn in business. Should you contact a liquidator?
There are many factors to consider before making that decision, like:
- How much money do you owe creditors?
- How will this affect your employees?
The answer isn’t always clear-cut; that’s why this blog post will cover how a liquidator works and whether you should contact a liquidator when your business is in trouble.
What is Liquidation?
Liquidation is the process of selling all assets of a business to pay off creditors. This includes inventory, equipment, and other property. Liquidation can be done voluntarily or involuntarily by court order. Entrepreneurs need to understand their options when it’s time to liquidate their company to protect themselves from possible legal pitfalls.
As with any business decision, some pros and cons must be weighed before making the final call on whether or not you want your business to go through this process. You want an expert opinion on what it means for your specific situation before deciding anything else about completely getting rid of your business.
Advantages of Liquidation
The liquidation process is difficult for any company, and the decision to sell assets is not taken lightly. When faced with this tough situation, some advantages can come out of it.
- Liquidating a business can be an excellent way to raise funds to pay off debts or create liquidity.
- A liquidated company may have excess equipment sold for a profit if properly marketed and priced.
- Selling all assets allows the owner to move on without worrying about liabilities associated with the old company name or leftover inventory that might otherwise cause problems.
Disadvantages of Liquidation
Liquidation can be an effective way for businesses with few or no remaining prospects for success to close down quickly. However, there are disadvantages of liquidation for small businesses such as:
- Loss of business reputation due to bankruptcy
- Losing your job
- Having your personal property seized
- Not being able to get credit if you need it in the future
Options other than Liquidation
The thought of liquidating your company can be scary. There are other options that you might want to consider before making this decision. Many people think that the only option they have is to go bankrupt, but you could take many different routes instead. Here are some alternatives to bankruptcy:
- Selling your company at a discounted price, which will allow you to get something out of it while still being able-bodied enough to move forward with your life.
- Changing ownership or management structures so that employees and stakeholders have more say in how the company operates
- Finding an investor who will give revenue guarantees for them to receive equity stakes in the business.
How Can Bankruptcy Experts Help You?
In the wake of bankruptcy, some people will inevitably want to take advantage of the situation. In some cases, this may be done in good faith, but many times it is not. In these situations, liquidators are often hired to go through a person’s business and recover as much money for them as possible, leading to unnecessary financial conflicts.
In such situations, Bankruptcy Experts can help you with financial matters, including assisting you with filing for bankruptcy and provide counseling services so that clients don’t feel overwhelmed during such an emotionally charged event.
When the worst happens, it is important to know your options. Bankruptcy Experts can guide you through the crazy confusion to help you get clear on your options so that you can make the right decisions for yourself.
At Bankruptcy Experts, we are experts in Corporate Insolvency who have helped many people before with their business issues. We understand that this process may be daunting or confusing, but our team of professionals will provide expert guidance every step of the way. Contact us today.