Liquidating business assets

Posted by / 04-Mar-2017 03:55

It is critical that all clients be given notice that the business has been wound up; issuing of this notice represents the end of the partners' authority to agree to contracts and transactions with clients.

Liquidation is a legal process resulting in a company ceasing to exist.

Liquidation involves distributing a company's assets to pay off creditor debts.

Following liquidation, the company literally ceases to exist.

An asset that is not performing well in the markets may also be partially or fully liquidated to minimize or avoid losses.

An investor who needs cash to fulfill other non-investment obligations, such as bill payments, vacation expenses, car purchase, tuition fees, etc. Financial advisors tasked with allocating assets to a portfolio usually consider, among other factors, why the investor wants to invest a certain amount of money and for how long s/he would like to invest for.

Liquidate means to convert assets into cash or cash equivalents by selling them on the open market.

One should not rush into this; it is important to take advice about whether this is the best route for your business.

Don't be surprised if the wealthier partners find that partnership creditors pursue their assets before those of their co-partners.

Often, when joint bankruptcy orders are made against partners, an official receiver immediately becomes trustee of the partners' separate estates and trustee of the partnership.

While businesses can liquidate assets to free up cash even in the absence of financial hardship, asset liquidation in the business world is mostly done as part of a bankruptcy procedure.

When a company fails to repay its creditors due to financial hardship and prolonged losses in its operations, a bankruptcy court may order a compulsory liquidation of the business assets if the company is found to be insolvent.

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