What Happens To Assets When A Company Is Liquidated?

January 14, 2019 / FAQs

If your company is facing liquidation due to insolvency, you may have a number of creditors chasing you for payment.

Your Insolvency Practitioner will have the responsibility of recouping as much money as possible so that the company’s debts can be repaid as far as possible. Often, this is done through the sale of assets held by the insolvent company.

Which assets can be sold during liquidation?

Assets sold during a company’s liquidation can include property, vehicles, machinery and stock within the company premises.

Items that your company has obtained through hire purchase or loans are exempt from this process.

How is each asset valued?

To ensure that as much money is retrieved as possible, the assets will be valued by an independent valuer before they’re sold. The assets are often sold for less than their market value due to the nature of the sale – as, if a buyer knows the seller is going through an insolvency process, they are likely to push for a cheaper sale.

In most of the cases we deal with, the company directors believe their assets are worth more than they are. This is why it is important to get experienced, independent valuers to provide realistic valuations.

How are assets sold during a liquidation?

There are various options when it comes to selling the assets and it’s up to the Insolvency Practitioner to determine the most suitable option.

Items are normally sold at auction and/or though the Insolvency Practitioner’s own network of business contacts.

In certain circumstances, it may be possible for the director of the company to purchase the company’s assets – perhaps because they want to start up another company or use them at an associated company. (We can talk you through how this could be achieved for your situation.)

The Insolvency Practitioner will keep a record of which assets have been sold, how much money was obtained and who purchased the assets in question.

If your company is having financial difficulties and you’d like help on what you should do now, contact us at Clarke Bell (0161 907 4044) for your free advice.