If your business is not doing well and you are on the verge of insolvency, then the best strategy would be to liquidate your business. When you go into liquidation, your existing assets will be sold to pay off creditors and your company name will be removed from the register of the Company House.
Overview of Business Liquidation
Business liquidation is the major step taken when all other options fail. So, it is natural that you try to gather as much insight about the same. If you have no idea where to begin from, you can check out liquidation Australia firms such as Insolvency Experts located in Australia Wide, for their expert guidance.
Their team of specialists will access your current financial situation, help in developing a potential plan for the liquidation process. They have a 24-hour helpline wherein you can dial in and talk to their experts about your financial issues.
The liquidation process consists of two types:
- Solvent Liquidation
- Insolvent Liquidation
Solvent liquidation is often referred to as Members’ Voluntary Liquidation (MVL) wherein you decide to retire and shut down your business. This type of liquidation can be done when your business is solvent.
Insolvent liquidation further can be drilled down to:
- Creditors’ Voluntary Liquidation (CVL)
- Compulsory Liquidation
When you opt for CVL, you are voluntarily deciding to close your business and pay off your creditors. A liquidator will be appointed to take care of the creditors’ meeting and look into all the paperwork. They will also be responsible to sell off your assets and pay off the creditors.
Compulsory liquidation, on the other hand, is when you are forced by creditors to shut down your business. The creditors will put a petition in court and if the petition gets approved, a liquidator will be appointed to handle the liquidation process.
A liquidator also helps to:
- Provide all relevant information to the creditors regarding your business
- Carry out the investigation proceedings by interviewing directors
- Look at all the outstanding contracts and handling them
- Help creditors get their dues
When you see that liquidators have a lot of responsibilities, then you might wonder how they get paid. Well, this depending on the type of case they are handling. Liquidators generally get paid with the money got from the payment of your assets.
Reasons Why Voluntary Business Liquidation Is Right Option for You
If you are still thinking about whether you need to liquidate your business, then the below benefits might help you make the right decision:
- You need not have to worry about outstanding debts, as they as written off
- Your creditors will not be able to take any kind of legal action against you or your business
- Your business staff can easily claim for redundancy pay
- You can avoid court procedures
- You need not have to pay for leases or hire purchases
If you want to stay away from all the legal hassles, then opting for voluntary business liquidation is the best option that you have. You can even start a new business and move on to greater horizons.