Understanding Business Liquidation - A Brief Guide

Business liquidation allows debtors to return a huge portion of their ongoing debt to creditors and investors.

 

In turn, this avoids any violent disruptions in the industry's market activities.

 

While it sounds like a convoluted process, it is actually quite simple to initiate and easy to understand. We’ve collected the more important aspects you should know about it beforehand to help you understand what’s involved.

 

A Sworn Statement for Bankruptcy
A company submerged in debt can immediately file for business liquidation using a sworn statement. In this statement, they will name every asset and liability, the creditors they are due to reimburse, and the amounts owed. If the court approves the sworn statement's details and meets its criteria, they will initiate the voluntary bankruptcy process.

 

Creditors Can Initiate Involuntary Liquidation 
Aside from companies or debtors, creditors themselves can initiate business liquidation. Involuntary liquidation requires a company to owe the applying creditor at least CAD$1,000, and the company in debt having initiated a bankruptcy application six months before its involuntary liquidation request.

 

All Liquidation Is Subject to Court Approval
As we mentioned earlier, only the court's criteria and decision can give any debtor or creditor-applied bankruptcy approval. The court will derive its decision about your bankruptcy application if it complies with the Bankruptcy and Insolvency Act and has cleared other pre-requisite proceedings it appoints.

 

Debtors Can Cancel Any Existing Contract
Businesses having received liquidation approval can now inform their clients with existing contracts they will have to cancel them immediately. This will turn clients into creditors if their contract has a monetary bond upon breach without exception. If the company in debt fails to inform clients, the liquidation company is to provide formal communication.

 

All Liquidators Are Under Court Supervision
The court will supervise every action and decision of liquidators during the entire liquidation process. However, appraisals, equipment auction proceedings, and other necessary processes are the responsibility of the auctioneers alone.

 

Work With Asset Liquidators In Your Industry
To make sure you receive cost-effective and value-improving liquidations for your brand, always look to work with trusted liquidators in your area. Learn more about what Infinity Assets can do to help make your company transition as smooth as possible. Get in touch with us today