When a company goes into liquidation, its assets are sold off in order to pay creditors. But who gets to decide which assets are sold and how much they are worth? The answer may surprise you.
In most cases, it is actually the company’s creditors who have the final say in what happens to the company’s assets. This is because creditors are owed money by the company and they want to get as much of that money back as possible. To that end, creditors will hire a liquidator to oversee the sale of assets and ensure that they get the best possible price.
However, there are some situations where shareholders may have a say in how assets are valued and sold. For example, if a company is publicly traded, then shareholders may need to approve any asset sales. And in some cases, the court may appoint a receiver to oversee the liquidation process and make sure that all parties are treated fairly.
So, while it may not be the shareholders or the court who ultimately decide which assets are sold in a company liquidation, they can still have a significant influence on the process. And depending on the situation, they may even be able to block certain asset sales from taking place
What type of company assets might be sold in a liquidation process?
When a company goes into liquidation, it must sell off all of its assets in order to pay its debts. This can include physical assets such as buildings, raw materials, machinery, and inventory, as well as intangible assets such as patents work in progress and copyrights. In some cases, the company’s name and logo may also be sold in order to raise additional funds.
The proceeds from the sale of these assets are used to pay creditors, and any remaining funds are distributed to the shareholders. The liquidation process can be lengthy and complex, so it is important to seek legal advice before taking any action.
What happens to business assets in a company liquidation?
When a company goes into liquidation, its assets are sold off in order to pay its debts. This includes both physical assets, such as equipment and property, and intangible assets, such as patents and trademarks. The proceeds from the sale of these assets are used to pay creditors, and any leftover money is distributed to shareholders.
In some cases, the company’s shareholders may be responsible for any outstanding debts. In other cases, the creditors may be able to claim certain assets of the company in order to recoup their losses. Either way, the liquidation of a company typically results in the loss of all business assets
Who values a company’s assets in liquidation?
In the event that a company goes into liquidation, it is the job of the liquidator to value the company’s assets. This can be a complex process, as the value of assets can depend on a number of factors, including market conditions, the age and condition of the assets, and any remaining liabilities.
The liquidator will work with a team of experts usually RICS chartered surveyors to appraise the assets and determine their value. Once the assets have been valued, the liquidator will then sell them off in order to pay off the company’s debts. In some cases, the proceeds from the sale of assets may be used to provide a payout to shareholders.
Who is paid from the proceeds when the assets are valued and sold?
The answer to this question largely depends on the type of asset in question. For example, if the asset is a piece of real estate, then the proceeds from its sale will be paid to the owner of the property usually the mortgage or charge holder. However, if the asset is a business, then the proceeds will be paid to the shareholders of the company.
In some cases, the proceeds may also be paid to creditors, depending on the arrangement that was made when the debt was incurred. Ultimately, anything that has been pledged as collateral for a loan must be sold in order to repay the loan. As such, the proceeds from the sale of collateralized assets are typically used to satisfy outstanding debts.
Limited company structure protects personal assets
When starting a business, it is important to consider the legal structure of the company in order to best protect your personal assets. One option is to establish a limited company. A limited company is a separate legal entity from its shareholders, meaning that the shareholders are not personally liable for the debts of the company.
This can provide peace of mind in knowing that your personal assets are safe in the event that the business incurs debt or is sued. In addition, a limited company may be able to take advantage of certain tax benefits. Therefore, if you are looking to establish a business and want to protect your personal assets, forming a limited company may be the right choice for you.
More information is available on the valuation of assets in a company liquidation, our team have many years worth of expertise in these mates so we can help, contact us today.
With over three decades of experience in the business and turnaround sector, Steve Jones is one of the founders of Business Insolvency Helpline. With specialist knowledge of Insolvency, Liquidations, Administration, Pre-packs, CVA, MVL, Restructuring Advice and Company investment.