Life After Liquidation
Liquidation is the ending of a company so that the assets can be redistributed in order to pay off outstanding debts and creditors – also known as winding up, dissolution, receivership or administration. Sometimes liquidation is voluntary and other times it is forced, much like bankruptcy.
If you realize that you will not be able to pay back your debts, then you might decide to voluntary liquidate your company. An insolvency practitioner will be able to dissolve the company’s assets as well as pay off your creditors as much as possible. The insolvency practitioner will also help to protect you from being hassled by your creditors. Click here to find out more about how an insolvency practitioner can help.
Sometimes liquidation is forced, which is also known as compulsory liquidation. This might occur if your creditors demand payment from your business and apply to the court. You will be given an order to dissolve the company.
Liquidation by Thomas Leuthard, on Flickr. This work is licensed under a Creative Commons Attribution 4.0 International License.
Having your company liquidated can be a difficult process to go through. Many business owners feel like they are a failure and this causes them a lot of stress. They struggle to live with the shame and blame and they don’t know how to move forward after the failure of their business. Sometimes these business owners might even suffer from depression caused by the stress and uncertainty.
What Happens After Liquidation?
Before you make the decision to liquidate your company, it is also important to think about how you will deal with the aftermath of that decision and what you will do afterward. First of all, you will need to understand the emotional impact of the liquidation process, so that you can accept what is happening and cooperate. Next, you will need to make a plan for a future and figure out how you will recover.
The Emotional Impact
Some people might compare the reaction to the end of a business as being similar to grieving a death. In such a large and significant life transition, the business owner might feel the same emotions as someone who is grieving, including denial, anger, bargaining, depression and acceptance. A business owner will need to take the time to emotionally react to the situation and mourn the loss of their business. Having a supportive spouse or friend to talk to can be really helpful during these times.
It is important to remember that there is no business that is worth losing your health, marriage or family relationships over. If you’re feeling overly stressed, it is very important to seek advice in order to solve the problem so that you can move forward.
Accepting and Cooperating
One of the factors that will make liquidation more difficult will be if you fight against the process. If you are already starting the insolvency process, whether voluntarily or involuntarily, it will do no good to fight what is happening. If you don’t cooperate and help with the process, you will only be making matters worse for yourself.
Remember that you can’t expect a lot of emotional sympathy from your insolvency practitioner. Dissolving businesses is their trade and they have learned to shield their emotions from it. However, although they might not be a shoulder for you to cry on – they can provide you with incredibly valuable advice for dealing with your situation.
Goumbik / Pixabay
Setting Up a Successor Company
One of the main steps after liquidating your business is to set up a successor company, also known as a “Phoenix” company. This will usually be a limited company which will protect from incurring personal debts. When you are setting up this new company, it is very important to have the advice of a professional. When you are setting up new bank accounts, getting credit terms with suppliers, transferring employees, reducing your workforce or transferring machinery, equipment or vehicles this can be a legal minefield. If you don’t do it correctly then you could find yourself in trouble, so make sure that you have an expert on your side to guide you through.
Look to the Future
It’s important to remember that, although your business might have failed, it doesn’t mean that your life is over. Don’t give up on your dreams! It’s easy to get discouraged and want to give up, but if you still dream of business success there is no reason why you shouldn’t try again. Learn from the mistakes that you made when your first business failed so that you will not repeat them again the second time around.
Mark Baker is an entrepreneur and writer. He frequently contributes to a number of blogs about business, entrepreneurship and financial management.
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