Difference Between Going Out of Business and Total Liquidation

Operating a successful business is not a cakewalk. Business owners must make wise decisions for their businesses, considering the longevity of their operations. Moreover, operating a successful business, in the long run, demands you to make wise decisions at the right time. If your business is no longer profitable, or as a business owner, you decide to close up and move to greener pastures, you may consider a lucrative exit option. Total liquidation or going out of business are two of the options that you may look at. However, to choose between the two, you need to understand the significant difference between them. In addition to this, it is a wise idea to look for professional help.

As a leading law firm in Cape Coral with qualified business law attorneys, we have explained both the processes so you can take the step that is right for your business.

What is Liquidation?

Liquidation is the process that follows when a business is dissolved. If you are unable to sell your business to any buyer, you can liquidate your business assets. This is why it is crucial to value your assets before you sell everything.

Identifying and Valuing the Assets

The liquidation value is the net value of any company’s physical assets if it were to go out of business. This includes the following:

  • Real estate
  • Furniture and Fixtures
  • Equipment
  • Inventory

The company’s intangible assets are excluded from the company’s liquidation value. All of the company’s assets are distributed to lenders, shareholders, creditors, and more, based on seniority.

According to the U.S Small Business Administration, the liquidation value of small business assets is almost approximately 20% less than retail value.

Scheduling a Sale

Once you value your asset’s liquidation value, you can arrange a potential sale. Track your expenses, contact potential buyers, arrange a sale of assets through a public auction, consignment sale, or individual negotiations.

It is best to get in touch with a board certified attorney to help you with all legal procedures, including the paperwork, so you know what to expect.

The Bankruptcy Option

Another option business owners have is bankruptcy. If after liquidation, the value of the business assets is not adequate to cover your outstanding debts, you may need to file a bankruptcy. Bankruptcy is an option for many buyers after adding value to assets. On the contrary, if the value of a business asset is adequate to pay outstanding debts, filing bankruptcy will allow the court to sell off your business or professional asset, and will later pay your creditors from the proceeds.

Bankruptcy will totally wipe out outstanding debt and what you owe to creditors or suppliers, which is something that liquidation doesn’t allow. However, the option can be an expensive one for many business owners. Moreover, it is a long and tedious process as it involves intricate steps, with different types of bankruptcy options available. In such a scenario, hiring a business law attorney in Cape Coral will eliminate the hassles and help make the process easier.

Why Should You Choose a Board Certified Attorney in Cape Coral?

Making the right exit decision is a crucial step for every business owner. Hale Law Services will help you put an end to all your worries engaged with exit decisions. Our business attorneys will listen to your requirements, assess your conditions, and can guide you to make tough decisions when deciding to go out of the business.

For more information about our business law services, call us at 239-931-6767. We’ll be happy to guide you.

By |2022-12-22T03:30:51-05:00June 9th, 2021|Board Certified Attorney|0 Comments

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