If a limited company is dealing with debt it cannot afford, there are benefits to liquidating it, but there are also drawbacks.
There are benefits to taking this course that we detail below, even though liquidating a company may appear onerous and is typically a director’s last recourse when they are unable to pay their creditors.
1. discharges debt
Once the assets have been auctioned off and the proceeds have been utilized to pay off as much of the company’s outstanding debt as possible, the liquidation will wipe off the company’s debts.
Most of the time, some creditors will have to take a loss; while they won’t be pleased, it will be a relief for you.
2. reduces the strain
Although the liquidation procedure is challenging, you won’t be doing it; the liquidators will, giving you time to relax and assess the situation.
If you want to launch a new company, do it now and seek investors to put money into building a successful new company rather than paying off debt.
3. Workers receive redundancy pay
The company lacks the funds to cover the expense of layoffs and restructuring, therefore it does not apply. Another benefit is that the liquidator will make the layoffs; while this may not completely erase any animosity, it is not your choice.
Additionally, even if there are insufficient assets to cover the cost, employees will get redundancy pay from the government. Redundancy pay claims from corporate directors are also admissible; the current average claim is for about £9,000.
4. You might not have to pay anything.
It won’t cost much to have all the work done for you because the initial cost of creating the Statement of Affairs is typically quite modest and the remaining costs are covered by the proceeds from the sale of the company’s assets. Additionally, as previously said, you might be able to make a redundancy claim; this money can be put toward liquidation fees.
Obtain free liquidation guidance now.
The benefits of closing a limited corporation should now be clearer after reading this essay, we hope. If you have given the liquidation process and everything it entails a lot of thought, then these tips will help you decide if it is the best course of action for your business.
Call us at no cost at 0410 555 999 today for some free, no-obligation information on whether liquidation is the best course of action for your business.