The last thing that any company wants to experience is insolvency. However, when this is the case, most companies will start the liquidation process. While this is a last resort measure, it can still be beneficial for all parties involved in the process. Principle Insolvency is here to talk about how the liquidation process can be beneficial for companies experiencing insolvency.
Liquidation is a Long-Term Solution
Liquidation is something that all companies should take seriously. It means that your company is in a serious predicament. However, it can prove to be beneficial in the end. Here are some of the ways that this is a beneficial solution for all involved:
– Paid Employees: When many businesses face insolvency, it means that their employees lose out on their pay. During the liquidation process, employees can continue to collect their pay checks. They can claim their lost wages when the liquidation process begins, and the business is closed. Not only can they collect their outstanding wages, but they can also collect money for holidays and annual leave and redundancy payments.
– Transparency: Another benefit of the liquidation process is the transparency that all parties can expect through until the end. All debtors and creditors will be kept up to date about what is going on. This can be a huge relief for all parties.
– Privacy: Insolvency is something that no business wants to experience. It can be incredibly stressful. Understandable since bankruptcy and insolvency can stay on your credit score for up to 5 years and get in the way of you doing business in the meantime. However, with the liquidation process, you can expect your privacy to stay intact.
– Creditors Paid: If a business is insolvent, one of the only ways that a secured creditor can be paid the money they are owed is in liquidation. Once liquidator expenses are paid, the creditors who have filed with the courts are the next in line. It is the best way to ensure everyone achieves a satisfactory resolution.
– Restructure: If directors are looking to close a business and do a restructure, liquidation can be a great solution. Also, there are no third parties that can come and make claims at a later date. When the case is closed, it’s closed.
Proceed with Caution
It can’t be understated enough that the liquidation process is a serious one. It means that your business will be closed, effective immediately. It isn’t something that business owners should enter into lightly.
Insolvency Services in Auckland, Hamilton, Levin & New Zealand Wide
If you have a struggling company and you aren’t sure what you should do to move forward, you can turn to Principle Insolvency to help you. We will look at your situation and consult with you so that you choose the best scenario for your business. When there is no other way to pay your debts, liquidation might be the right step for you to take. Call us today!