For a large percentage of the general public, the idea of company liquidation generally relates to the failure of a particular business at the end of its operations. However, many people do not consider that liquidating a company can actually have some significant benefits, especially for the directors, which will be covered by the legal regulations that relate to winding up a company. Therefore, if you are a business owner and you are worried about your company going into liquidation, you should take time to consider the fact that a number of benefits can also be enjoyed if you have to wind up your company.
Stop debt collection
One of the main benefits from liquidating your company is that any action towards debt collection by your creditors will stop. Indeed, in most business situations when a company is in financial difficulties, the creditors will continually contact the company wanting repayment and a schedule for when such payments will be carried out. However, after the liquidation process begins such calls to the company will be forwarded to the liquidator, meaning that the executive directors of the business can spend time planning for the future of the business turnaround as well as their employees.
Prevent wrongful trading
In addition, it should be noted that by starting the process of liquidation the directors of a company can also avoid the practice of wrongful trading which involves a company continuing to operate when there is no prospect of the various creditors being paid on time. Indeed, by entering into liquidation, the directors cannot be liable for the debts of the company, whilst making sure that any claims of wrongful trading will not be made. It is also important that if you are worried about liquidation that you take expert advice from qualified professionals as the insolvency process can sometimes be a legal minefield. It is especially important as a business owner for you to make the right decision as to whether you want to liquidate your company at the right time.
The executive directors of a particular business should also consider voluntary liquidation as a benefit, especially given that the various costs associated with winding up a business can be avoided, whilst leaving the creditors to be paid by the liquidator. If voluntary liquidation is not taken, then the company may be accused of wrongful trading, meaning that the directors are liable for the various debts which have been accrued during this particular period of time.
Furthermore, by carrying out the liquidation process in a timely way, the executive directors can make sure they will not be accused of wrongful trading while also reducing the amount of personal liability that they will have to accept. This is especially pertinent for the senior management team as it will prevent them from taking bad decisions that could have significant consequences for both the creditors and the employees.
If you are looking for advice about how to turn around your business or to enter the process of liquidation, then you should consider contacting your local firm of business advice experts as soon as possible.