Rabin Answers FAQs Regarding Liquidations

 

For most people, dealing with liquidation is a new experience and one that may bring confusion and lots of questions.  You may be wondering how to start and need answers. Keep in mind that while there are general terms and conditions to liquidating a business, there are different types of liquidations, with their own specific requirements and conditions.  

So why do companies liquidate?  The primary reason for liquidating a company is to have their assets and properties appraised and sold with the money from the sale redistributed to creditors.  If there are surplus funds, they are given back to the shareholders at which time the business ceases to exit. 

A Creditors’ Voluntary Liquidation:  If you are running an insolvent company and want to voluntarily place your business into liquidation (before your creditors do so), a special resolution must be passed by a majority of shareholders.  At this time, a business usually stops normal operations.   As head of the company, you are required to call for a meeting of the creditors in order to update them on the financial condition of the company.  Finally a liquidator must be appointed and a liquidation committee formed.

Members’ Voluntary Liquidation:  This is a different type of liquidation and is done in response to an owner choosing to close a business due to retirement or other reasons.  A company will need to appoint a liquidator and the process is similar to a creditors’ voluntary liquidation.

Compulsory Liquidation:  This is a forced court ordered process and occurs when the business’ creditors file a petition with the courts in an effort to receive some of the money owed to them.  Often the sale of the insolvent company’s assets will not bring in as much money as the amount of debt.  In this case, the liquidator makes the determination how the money is distributed to creditors.

Please see our website for more information regarding our liquidation and auction services.  Rabin has the expertise to help you through the process. 

Rabin is an international company that specializes in creating liquidity for complex manufacturing facilities with idle or marginally productive assets.  Our operations include selling entire plants, multiple plant locations, or surplus individual items by auction or liquidation and much more. Past auctions include names such as Hostess, Braniff Airlines, Montgomery Ward, and the Railway Express Agency.  Please contact us to learn more about our professional services.