Business liquidations are relatively common occurrences today. They usually occur when a company becomes insolvent and can no longer pay its bills. although liquidations can also occur in retail businesses that have no intention of going out of business but are trying to sell poorly performing products at low prices. Business owners who are considering this option can read on to find answers to eight of their peers’ most commonly asked questions about the liquidation process.
- How Long Does Liquidation Take?
The length of time it takes to liquidate a company depends on the circumstances surrounding its closure. Large, complex companies can take years to liquidate, while smaller ones may take only a few months. Working with qualified Store Liquidation Companies can make the process easier and ensure that it proceeds as quickly as possible.
- What Does the Liquidation Process Look Like?
The process starts when a company stops doing business and contacts a liquidation expert. From there, the assets will be sold, and the money obtained from the sale will be returned to creditors or shareholders. While the basics of this process may sound easy, there are a lot of steps that companies must go through to complete the liquidation successfully.
- Can a Company Continue to Operate After a Liquidation?
When considering liquidation from a finance and economics perspective, liquidation represents the process of wrapping up the business’s affairs, which means the company can no longer operate after the process is finished. There are also some cases where companies liquidate some of their inventory without shutting their doors entirely, as in the retail industry, in which case, the store can continue to sell its other goods as usual.
- Can a Business in Liquidation Be Sold?
Whether a business in liquidation can be sold depends on what point in the process the company is at. In most cases, business owners try to find buyers before liquidating their goods. Once the liquidation process has been completed, there may not be much left of the company to buy beyond its trademarks and other intellectual property.
- Can Business Owners Liquidate Their Companies Themselves?
The short answer here is no. Business owners must find licensed liquidation or insolvency professionals to help.
- Are Liquidation Costs Tax Deductible?
The fees paid to a liquidation company can be claimed as tax-deductible expenses. However, in most cases, liquidation occurs when companies become insolvent, so there’s little chance that this situation will arise.
- How Much Does It Cost to Liquidate a Company?
The costs associated with liquidation vary widely. Even the simplest liquidation usually requires paying at least $2,500, though. Factors that can increase liquidation fees include the complexity of the business, the cooperation of directors, and the availability of records.
- Who Gets Paid First?
There’s a set order to the way people get paid when a company becomes insolvent. Expect the liquidation expert to prioritize payments in this order:
- Secured creditors with fixed charges
- Preferential creditors
- Secured creditors with floating charges
- Unsecured creditors
- Investigate Options Now
Know that a business is heading towards insolvency? It’s time to start investigating liquidation companies that can help. The process can take some time, and having the right liquidation expert lined up to facilitate it makes all the difference when it comes to finding buyers and ensuring that everything goes smoothly.