Anytime you are facing financial difficulties with your business, it’s a trying time. It can be difficult to know what to do to get yourself back on track. There are two different routes that business owners can usually take, liquidating their business and closing its doors, or restructuring the business to give it another go. There are challenges that will be faced regardless of the direction that you decide to take. This is a decision that shouldn’t be taken lightly. Principle Insolvency is here to talk about these two different directions that business owners have when they are facing difficulties financially.
Restructuring is a Potential Lifeline
If you are looking to completely change course with your business, you might consider restructuring. This can be a last ditch effort in saving your business that you’ve worked so hard at. You will have one goal in mind, restore profitability and ensure long-term viability. There are certain steps that are involved with restructuring including refinancing, debt restructuring, asset sales, and operational improvements.
Liquidation is a Last Resort
As a business owner, it can be difficult to admit defeat. When you[‘re facing liquidation, this means that you have exhausted all other options first. The assets of your company will be sold at this point to generate funds. The funds will be used to pay creditors, shareholders and employees that are owed money. You will be working with a liquidator that helps gather all the company’s assets, manages affairs, and oversees the sale of any property to benefit the creditors. They will also help ensure there is legal compliance throughout the process.
How to Make the Right Choice Between Restructuring & Liquidation
Choosing whether or not to try restructuring your business or going into liquidation can be a difficult decision to make. Here are some things to consider as you make this even important decision.
– Evaluate Financial Distress: A financial assessment is the first step in determining what your next move should be as a business. If the debts you’re facing are insurmountable, liquidation might be the best option. If there is still potential with your business and you’re just experiencing a rough patch, restructuring might be a good choice.
– Future Recovery Potential: If there are any real pathways to recovery, you may be more inclined to attempt to restructure your business. If it seems that there is no hope, liquidation might be in your future.
– Stakeholder Implications: You also need to think about the stakeholders and shareholders. There are different ways that it impacts these people and should always be considered.
Insolvency Services in Auckland, Hamilton, Levin & New Zealand Wide
If you have a business that is in duress, you can turn to Principle Insolvency to help you know and understand what your options are moving forward. We want to help you do what is best for your business and all those involved. Call us today!