Millions of businesses are started each year throughout the country. However, not every venture will last. When the time comes for a business to close, owners have different options regarding how to end their operations. In this situation, it’s important to evaluate liquidation v. going out of business.
Before deciding between liquidation and going out of business, it would be best to consult with an experienced Florida business attorney. Your lawyer can help you evaluate your circumstances and determine your business closure options.
What is Liquidation?
When a business decides to liquidate, it generally means that the entity will convert all of its holdings and assets into funds. Usually, before the business’s assets are sold, the owner will have them professionally appraised to determine their value. The purpose of liquidating business assets is to convert them into funds and pay any outstanding business debts and the entity’s creditors.
Before liquidating, the business owner should conduct an inventory of their holdings and supplies. Once this information is gathered, the owner can generate a list that includes all the business’s property and materials.
Typically, liquidated business assets can include items of value such as:
- Company vehicles,
- Real estate holdings
- Accounts payable to the business
- Retail items in stock
- Office equipment-phones, computers, fax machines, copiers, shredders, etc.
Liquidation values are not usually the same as market prices. Often these items will be appraised at a lower price than the owners paid.
Once you have accurately valued your business assets, you can schedule a sale. The liquidation sale can be conducted through a public auction or privately. There is also the option of selling your property through consignment or negotiating with a single buyer. Liquidation may be suitable for owners who want to convert their holdings into cash and resolve their outstanding obligations.
Going Out of Business Through Bankruptcy
Businesses can close for various reasons. In some circumstances, what was meant to be a successful venture can end up being unsustainable. In that situation, an owner may decide it’s best to file for bankruptcy protection as they are going out of business.
If an owner decides to file for bankruptcy, the bankruptcy court will become involved in how the business’s assets are liquidated and how creditors are paid. This option may be necessary if the business cannot pay its debts.
In some types of cases, the bankruptcy court will appoint a trustee to oversee the sale of a debtor’s assets and use the sale proceeds to pay approved creditors. Depending on the bankruptcy, the debtor’s remaining personal debts may be discharged. However, there are different types of bankruptcy, and it’s important to know the distinctions before filing. If you are considering going out of business through bankruptcy, you should contact an experienced business attorney to review your options.
Winding up a business can be complicated, and you will want to work with an experienced business attorney during the process. You and your lawyer can review your situation and determine the best solution for you and your business interests.
Contact an Experienced Florida Business Lawyer
Attorney Richard Sierra at the Florida Small Business Center assists clients like you with commercial leasing, business, and litigation matters. As always, Our Goal Is to Help You Succeed™. For an appointment, you may call us at 1-866-842-5202 or use the contact form on our website. We represent clients throughout the State of Florida, including Coral Springs, Coconut Creek, Boca Raton, Delray Beach, Pompano Beach, Sunrise, Fort Lauderdale, Miami, West Palm Beach, Jupiter, Deerfield Beach, Stuart, Port St. Lucie, Orlando, Naples, Fort Myers, Sarasota, Tampa, and surrounding communities.