When is it time to liquidate my business?
Mr Bankruptcy
27th July 2022
The decision to liquidate your business is not an easy one to make, but if your business is in financial difficulty the time may have come to consider this as an option to allow you to move forward.
What is liquidation?
Liquidation is the means by which you officially close your business. There are three types of liquidation:
Compulsory liquidation: This can occur when debts are left unpaid and repayment demands not met. For a compulsory liquidation to take place the debt must be more than £750, be undisputed and the debtor must have been notified by the creditor of their intention to collect the debt. A winding-up order may be filed by the creditor if the debtor doesn’t pay the statutory demand within 21 days and doesn’t contest the debt.
Creditors’ voluntary liquidation: This is when an insolvent business decides to close and voluntary liquidate. Any assets will be distributed to creditors and liquidation allows the directors to write-off unsecured and non-personally guaranteed debts.
Members’ voluntary liquidation: This is only for solvent businesses and allows directors to close their business and free up the funds in it. This could happen if, for example, you choose to retire.
Why do businesses choose to liquidate?
If your business becomes insolvent, meaning your business is no longer able to pay the money it owes, it may be time to liquidate your assets, turning them into cash. This can then be used to pay creditors for any outstanding debts owed.
Difficult trading conditions, a decline in demand for your product or services or a decision that you no longer want to keep your business, are all reasons for business owners to decide that it’s time to liquidate.
When a business liquidates all its operations cease, and it no longer exists as a business entity, but taking this approach can help owners to clear their debts for a fresh start.
Is liquidation right for you?
At JRA we are very aware that for many of us, this will be their first time managing business or personal debt and it can feel overwhelmingly daunting to navigate your way through the different debt management options when you may already be feeling stressed by the debts you currently have and the impact they are having, both on your business, your family and your wellbeing.
We approach each of our consultations as an opportunity to help inform our clients of all the options they have for managing their debts, so that they are empowered to make the decision that’s right for them and best for all parties, today and in the future.
James Rosa Associates
James Rosa associates is a firm of debt advisors and debt adjustors. With a supportive and friendly approach, we offer a full range of advice and professional services to individuals and business owners/directors who face unmanageable debt or who are involved in civil or commercial disputes. Our services include:
We are authorised and regulated by the Financial Conduct Authority (FRN665061) to work with clients to produce bespoke solutions to fit their specific circumstances.
Find out if you qualify for a free consultation
If you’ve decided that you want to deal with an unmanageable debt, or bring a dispute to a swift and cost-effective resolution, then please contact James Rosa Associates, ring 0845 6807217 or email enquiries@jamesrosa.co.uk to find out whether you qualify for a free consultation.
Please be advised that all views expressed in these posts are those of the author and not of James Rosa Associates ltd.