If you are facing a threat from creditors who are forcing you to perform a liquidation of your company, then there are aspects that you have to know that will help you make the right decision. When it comes to liquidating your company, you have three major options to consider. These include compulsory liquidation, members’ voluntary liquidation, and creditors’ voluntary liquidation. Each of these liquidation options is subject to certain rules and regulations governing its practice. Moreover, each has also its own prerequisites and procedures to follow. With this note, we would want to give focus on compulsory liquidation.
Most of the time, a compulsory liquidation of company is the most problematic for many businesses experiencing the same threat you might be suffering. It is because it typically occurs when creditors petition the court to force you to liquidate and sell your company’s assets in order to have enough money to pay them your outstanding obligation. This normally becomes permissible when the total amount of your company’s outstanding debt is over the amount stipulated in the laws in which you were not able to pay after you have formally agreed for the payment scheme.
Consequently, with this liquidation of your company, your business will be dissolved and will cease to exist once the liquidation has concluded. The good news is that you still have some available courses of action to postpone or stop this compulsory liquidation. You can either decide to have a financing solution, a company voluntary arrangement, and company administration. Deciding on each of these options depends on how far you have gone in the process of financial hardships. You just have to remember that the best way to stop a forced liquidation is to pay what you owe to the creditors or negotiate a payment scheme that you can manage to pay. Or else, you can also opt for formal insolvency.
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