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Effects of Liquidation on a Business

The effects of liquidation on a business means that it will stop trading and the powers of the director’s will cease. The directors are replaced by a Liquidator whose job it is to realise the assets of the business for the benefit of all the creditors. All of the employees are automatically dismissed. 


Effects of Business Liquidation – Two Options

There is a big difference in Business Liquidation in that there are two choices.

One type is where creditors force liquidation upon you and a liquidator takes control of your business and that leaves you in a vulnerable position with very few choices.

The second option is where you approach a Liquidator (a Licensed Insolvency Practitioner) to act for your company. In this latter case it can be a lot more planned and you will have more control – this is important if you want to try and carry on in business in some form. This latter type of liquidation is called a Creditors Voluntary Liquidation and is also known as a CVL.

In both cases the liquidators objectives are the same though; to get in and sell the assets to pay back creditors.


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