Many business owners that we assist are nervous of going through the liquidation process. They usually are unaware of the benefits of liquidating a company. Perhaps you have the same fear. Perhaps you fear that you are going to lose your business or that you will lose your assets if you liquidate your business.
Liquidation need not be a negative experience. In fact, liquidation is only one leg of a restructuring process that can help take a business out of harm’s way.
What Are the Benefits of Liquidating a Company?
It sounds too good to be true that there are benefits to company liquidation, does it not? There really are benefits to liquidating a company. We can also tell you that there are actually more benefits to liquidating a company than trying to keep a company that cannot pay its debt. There are certainly benefits to liquidation if your company is experiencing financial difficulties.
Keeping a company that is under financial pressure takes hard work and all your attention. Worse: it eats up all the cash flow. The stress gnaws at you and sucks up energy needed to put out fires. This leaves very little energy. Your focus is gone and there is little time left for what you should be doing, which is growing your business. You borrow more and more money, putting yourself at risk but there is no win in sight. You feel hopeless and it feels as if the harder you try the less you accomplish. That is the nature of businesses under financial pressure that trade for too long and should have stopped when the troubles started.
This is the benefit of liquidation—instead of putting your money, energy and attention in a black hole, liquidation arrests the problems almost immediately. This frees up your cash flow, energy and attention to go back to where they should be. We can restructure the company so that you can continue to trade (without the debt) and keep your assets and staff if you wish to. It is all in how the liquidation process is managed and that is how we manage it for your: we help you to navigate the difficult practicalities of financial pressure and restructuring while you liquidate your business.
Understanding the Liquidation Process
To better understand how liquidation works, it is important to know that the voluntary liquidation process is designed to help businesses in distress. Voluntary liquidation allows the business owner to take control of the situation and timeously get rid of a problem company before it implodes and before there are mountains of debt. Liquidation is not the end of the road. In fact, if the business under financial pressure does not liquidate, the chances are excellent that it will soon reach the end of the road when it runs out of money or when the creditor pressures get too much. Liquidation frees up cash flow and business and allows for the business to restructure itself so that it can continue to trade.
How to Liquidate a Company
The steps to liquidate a company involves that the business owner must first make the decision to liquidate the business. That is the hardest part. Once the decision was made, the process is started by engaging our services. We will draft the required documentation for signature. Once signed, we will ensure that the company is liquidated. Once liquidated, the Master will appoint a liquidator. The liquidator will wind up the affairs of the company by dealing with creditors and assets (if any). After the liquidator’s work is complete, the company is deregistered at the CIPC and ceases to exist. Debt which has not been paid from the proceeds of the sale of the assets cannot be collected by creditors unless the directors signed personal surety.
Liquidation with SARS Debt
One significant advantage of liquidating a company in South Africa is that it can address SARS debt. By eliminating the burden of unmanageable debt, including tax liabilities, you can focus on rebuilding your business on a more stable foundation.
Conclusion
In conclusion, liquidation offers a viable solution for businesses facing insurmountable financial challenges. It provides a way to eliminate debt, protect assets, and create a fresh start. By using the business liquidation process you have an excellent chance that your business can emerge stronger and more resilient.
