If you see your company struggling with cash flow problems and you keep worrying about creditors chasing you for back logged payments then the thought of liquidation can be a very stressful and frightening one. All companies want to avoid liquidation and many business owners find it very distressing; not only is their financial worry to be concerned about, but also the staff at the business, as they are soon be redundant and without any money. This is why you need to prepare and have a good understanding in regards to the possibilities in the event of liquidation and the measures you can take to avoid this horrid situation. Never feel alone in these situations, there are various options in regards to helping you and your business. Winding up petition lawyers are there to help and they will support you as your company gets through all the debt ridden cobwebs and slowly write off those debts
What is liquidation?
In some cases, liquidation can be avoided, if its looming, it doesn’t mean that it will automatically affect your company. The important thing is knowing how to handle the certain situation and finding solutions. Liquidation is a formal insolvency procedure where a company’s trade is brought to an end. All the companies’ assets are sold and liquidated- leading onto the sale of the company and making the business owner pay as much as possible to the company’s creditors. Every business owner will try and prevent this from happening, but sometimes it is inevitable. If a business does has to close down, it might be worth using an estate liquidation company to help list all of the stock for an online auction. This should allow the business owner to make as much money as possible from the remaining products.
Solutions to prevent liquidation
For this reason, as a business owner or director, you will want to try your upmost hardest to avoid this situation. One way in which this can be achieved is by using a Company Voluntary Arrangements as a way in which the company debts can be rescheduled and re-planned with a proportion possibly written off. A CVA is a formal agreement between you and your creditors in regards to paying off a chunk of your debts over a period of 5 years with an unaffordable balance being written off, this includes any unaffordable VAT and PAYE arrears.
Sometimes bringing a professional and licenced professional in can be relatively useful, as they will be able to look into your situation and offer some legal advice which includes your cash flow, your current assets and the debts you owe people. They can decide what the best option is for you and if liquidation is necessary. Also sometimes, if you are in possession of some high-cost items, you might need to sell these in order to release some value. Depending on your business, you may also have some stock which you can sell off to release some value which then can be sold in wholesale. If needs be, you can also sell the entire property where you company is located, opting for a smaller and cheaper location. All of this will give you the chance to release enough cash to pay off those debts whilst still having your company operate and then you can focus on rebuilding and use what you have gone through as lesson for the future.
