If your business is going to be liquidated, or you want to run your own liquidation business, then you will likely want to learn all you can about what takes place during this process. Basically, there are two ways a business can go into liquidation, under their own accord or involuntarily.

Throughout the liquidation process, the assets of the financially troubled business are sold and the proceeds are utilized to repay as many investors as possible. Even though the exact steps taken will change according to the type of liquidation, the event usually involves the sale of all the company's real estate and products, followed by the complete dissolution and closing of the organization.

Quite simply, whether the liquidation is voluntary or compulsory, the outcome will be the same. Creditors are compensated as much as possible and the company will no longer exist. Those who want to run their own liquidation business will get the best price for the products by contacting businesses that are liquidating and must get rid of their products.

In most cases, a business just simply needs to get rid of excess merchandise and will just need to liquidate a certain product line. In the consumer product liquidation business, go after retail-ready products only.

The Mandatory Liquidation of a Business: In a mandatory liquidation, an appointed individual creates a liquidation petition to the court to get the bankrupt company liquidated in an effort to recover funds to pay as much debt as possible. The petitioning person is often an Official Receiver, creditor, Secretary of State, or shareholder.

The directors of the financially troubled company may also be legally file a petition to close the company and pay off debts, though this is typically dealt with through a voluntary liquidation instead.

Following the compulsory liquidation, the procedure for selling the company's resources begins, and all lawsuits the company was involved with typically dissolves. Basically, any legal actions taken by investors or vendors are considered void after the liquidation has started.

The Voluntary Liquidation of a Business: The procedure for voluntary liquidation is normally less stressful since the whole procedure is thought-out and the company directors' gain access to the assistance and guidance of an insolvency specialist throughout the liquidation.

Provided that the necessary information can be confirmed to show the liquidation will offer the best outcome for the company's investors, then approaching a professional to liquidate the company is rather simple.

In the event that the bankruptcy specialist finds that the company's' directors are wanting to liquidate their company regardless of the fact that there are far better options available, they might refuse to agree to the consultation. In that case the insolvency practitioner would recommend better alternatives.

Why You Would Want to Liquidate Voluntarily: Whenever a company is involved with an excessive amount of debt, it might be time for them to accept that liquidation may be the only move to make. Postponing the procedure is only going to result in even more company debts, causing you to be held personally responsible.

Despite the fact that directors are not typically held liable for the debts of a minimal company, you are able to be charged significant fines and are ordered to pay certain debts if the court finds you guilty of wrongful buying and selling. This is a likely outcome if you continue to keep trading while insolvent without carrying out your responsibilities as a director.

By voluntarily employing an experienced insolvency specialist to go forward and handle the process, you can keep away from the majority of the hassles and headaches caused by being wound up and forced into a mandatory liquidation by investors.

If you are a liquidation business owner that buys and sells closeout products, businesses on the verge of liquidating will be more inclined to sell you their products are a very reasonable price.

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By Clifford Woods

Clifford Woods is the owner of Rapid-Liquidations.
We buy complete inventories of unwanted or discontinued consumer merchandise for cash and sell complete inventories of consumer merchandise at about 15 to 20% of retails prices!
If you are interested, we also have a complete, easy-to-follow manual on how to get started in this business yourself.