Liquidation Process

How To Liquidate a Limited Company

How to Liquidate a Limited Company

One of the key elements to learning how to liquidate a limited company is to know the facts and to be prepared. Before you start, it is important to know if the business was set up as a limited company, which means that it was organized as a separate legal entity from your personal finances. Under a limited company, all profits are owned by the business, and in most cases, all of the debt is owed by the business. There are privately owned limited companies  and publicly owned limited companies, and the rules governing them can vary from each type of organization and from country to country.  That being said, another early step in the process should be to consult with your attorney or tax advisor.

The Process for How to Liquidate a Limited Company

A limited company or LTD is common in Canada and Europe while in the U.S., a corporation has similar characteristics.  An LTD has members who own shares in the company and it is run by a director or directors who may or may not also be shareholders.  In the event the company goes bankrupt, the shareholders’ have a limited responsibility for the company’s debt that is equal to the amount of shares that they own but have not yet paid for.  

The directors of a LTD company do not have any responsibility for the financial liabilities as long as none of the debt was personally guaranteed and there is no indication of wrongdoing on their part.  The process for how to liquidate a limited company includes the following:

  • Holding a formal meeting with creditors
  • Appointing an authorized liquidator who will be in charge of the process.
  • Inventorying, appraising, and selling all of the company’s assets and properties (Consider outsourcing the process to a qualified third party asset recovery and disposition firm  who has the expertise and resources to obtain maximize value.)
  • Placing a stop on all contracts to other businesses and settling up with employees
  • Finally once assets are sold and liquidation costs factored in, funds are appropriately distributed to creditors with any remaining money going to the shareholders
  • The business is official closed

Rabin is an international company that specializes in creating liquidity for complex manufacturing facilities with idle or marginally productive assets. Rabin’s operations include selling entire plants, multiple plant locations, or surplus individual items by auction or liquidation and more. Past auctions include names such as Hostess, Braniff Airlines, Montgomery Ward, and the Railway Express Agency. Contact us for more information on the methods in which we can assist in how to liquidate a limited company.    

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How to Liquidate a Limited Company