Everyone knows the risks and dangers of running a business, to begin with. Of course, no one things that the business they start is going to face problems and have to go down. But there are many reasons why a business can struggle. The business plan might be wrong, the customers might not want what the business offers, or a poor economy could hamper it.
These things happen to businesses, and there are a variety of options that can be used to face up the problem. Some business owners might try to sell the company. Others might persist and find a way to make it work. But if those options aren’t possible, then the owner of the business might find that liquidation is the way forward for them and their business. It’s never an easy decision to make, but, sometimes, it has to be made. So, how does the process of liquidation actually work?
Winding Up Resolution
The owner of the business is required to call a meeting of any shareholders and board members. During this meeting, the business owner will propose a winding up resolution. This is what kick starts the process of liquidating the business and its assets.
There must be a 75% majority agreement among shareholders that this is the right course of action before it can be passed. The minority, if less than 25%, will not get a say if the rest want to issue the winding up resolution. Next, an insolvency expert must be appointed to oversee everything that will happen from there. The local authority keeps track of all local business liquidations, so they will have to be notified too.
For most companies that go through the liquidation process, it will be because of unsustainable debts. Within two weeks of the liquidation practitioner being appointed, the creditors will have to be contacted. These are the people and organisation that the company owes money to.
The company’s representatives and its creditors will then discuss the situation. They will have the chance to ask questions and learn more about the reasons behind the liquidation. On top of that, they might also want to make suggestions, such as changing the liquidator, if they feel it’s necessary. The creditors must all be told about the meeting seven days in advance of it happening too. You can learn more about how creditors reclaim debts at businessdebtline.org.
Liquidators Take Over
The liquidators effectively take over the running of the business in its final stages. It will be taken out of the hands of the owner and directors. There are then specific liquidators that carry out tasks specific to certain industries. For example, you can learn about grocery or restaurant liquidation at https://bullpenfood.com/closeout-buyers/. And there are many different types of liquidators that can be used.
In addition, whether your company is upgrading to new furniture, downsizing, or closing operations, Office Furniture Liquidators can help you minimize your costs to decommission your old space and liquidate your used furniture and equipment.
The liquidator that oversees the process will be responsible for settling all legal and debt disputes. And they will use the sale of assets to resolve as many conflicts as possible. And they will be in control of all this until the business has finally wound down, and the liquidation costs have been paid too.