Liquidating Assets

Every company goes through several ups and downs in its lifetime. And there are some companies who may have to unfortunately shut down for some or the other reason. It is not advisable that while winding up a company, you pay the least attention to what is happening in the management, just because the organization is no more in business. In employing dissolution as an exit strategy, you should most importantly think on how to go about with liquidating the assets.

What is Liquidating Assets?

In business, this generally relates to selling off all the assets, property and possessions of the company for paying off corporate debt and liability to the creditors. If any finances are left after the process of the business debt payment is over, they are distributed among the members of the management or any other important entities related to the company. Liquidation can also be adopted as a step before filing for bankruptcy. Typically, there are two types of liquidation; one being compulsory and the other being voluntary. The former refers to one which is initiated by the court of law, creditors, and other authoritative entities. The latter relates to liquidation which is a result of the decision taken jointly by shareholders or top management.

How to go about Liquidating Assets

Every liquidation case and condition is different, so it is always better to consult with an attorney as well as an accountant. Draft a plan and present it to these professionals who will suggest any modification. The next step that you need to take is to prepare a list of all the company assets and possessions which can be used in the process. Make sure you gather all the necessary legal documents along with the assets. Now, you will have to determine the appropriate market value that the listed assets can fetch.

It is recommended to take assistance from a good appraiser for this procedure. After you get a report from the appraiser, find out if you would really need to sell those assets at the prescribed rates. Make provisions for all costs that are related to selling off these assets and possessions. These costs involve labor costs, property appraisal fees, storage costs, rentals, and the advertising charges. After all this is done, you may proceed with the procedure of selling off the assets and possessions at beneficial rates.

What are Self Liquidating Assets?

Self liquidating assets have no relation to the above concept of selling assets to pay off debt and liability. These are assets whose services are used to recover the expenses that were incurred in purchasing them. For a certain period of time, they help the owner in recovering the expenses of purchase and after some time, these assets start to bring in profits. Examples can be a flat or an apartment to be rented out, a toll bridge, or other assets that can possibly be used as income generators.

If you have any doubts regarding the process of liquidating assets, it is recommended that you avail the services of attorneys and accountants.