Sometimes stores need to close. When this happens, a process called liquidation begins. Liquidation is the process of selling your inventory in order to maximize cash flow prior to closing. Here are three facts about liquidation.
1. Professional Assistance Options
Liquidation can be complicated and difficult, which is why there are professional services available to assist you. If you need or want help, you can contact a liquidation expert. These experts can provide you with training and advice to help you avoid various mistakes and pitfalls. They can also provide you with various options and strategies, depending on your type of business and timeline.
2. Voluntary Liquidation
There are two main types of liquidation: voluntary and compulsory. Generally, voluntary liquidation is when those in charge of a company choose to shutter the company or its brick-and-mortar locations. In this process, members of the company pass a liquidation resolution and then gradually sell off inventory, wind down operations, close locations and finally cease operations. Check with your local jurisdiction for any guidelines you need to follow for voluntary liquidation.
3. Compulsory Liquidation
Compulsory liquidation can be a bit more complicated than voluntary liquidation. This type of liquidation must be filed in court. It can be filed by shareholders or members of the company, but it can also be filed by a creditor or by a government official. The petition requirements may vary by jurisdiction, but in general, you need to have adequate grounds to petition for liquidation, an official court order to begin liquidation and an administrative receiver. Make sure you check with the relevant jurisdiction and governing bodies when you’re petitioning or conducting any kind of compulsory liquidation.
Whether liquidation is something you need to do or choose to do, you can still find ways to ensure it benefits you. Do your research and work with liquidation professionals as needed.