Like many businesses facing challenges, you’ve done everything you can, but at times, exiting might be the best option.
Our team brings intelligence and innovation, so you’ll feel secure with every decision. We strategise to manage the process effectively, minimise financial losses, and navigate this challenging period with integrity. If you’re running a small business, you might feel like you have no one to rely on, but you’re not alone. When the numbers look impossible, we’re here to lend a hand, helping you adapt and emerge stronger—we won’t give up until we find your way forward. Here are our business liquidation tips, offering actionable steps for small business liquidation to make the process as smooth as possible.
The Top Business Liquidation Tip: Understanding What It Means for Your Small Business
Liquidation marks the end of a business’s journey, legally closing operations and distributing assets to settle debts. It can be voluntary, initiated by the business owners when continuing is no longer feasible, or forced by creditors through court proceedings. To know how to survive business liquidation, we must first understand the different liquidation types and what they mean for your business.
Creditors Voluntary Liquidation (CVL)
This type of liquidation is chosen when a company is insolvent and cannot pay its debts. CVL allows business owners to retain some control over the liquidation process, leading to a more structured dissolution.
It’s a step that small business owners can take to address insolvency proactively, potentially reducing the severity of financial fallout by ensuring creditors are paid to the extent possible from the remaining company assets. Our ASIC-registered liquidators can ease the process for you. We handle all necessary formalities, including convening shareholder meetings and managing the procedures required to place your company into liquidation.
Simplified Liquidation
An easier, quicker and more cost-effective path for small businesses looking to liquidate. More streamlined than a traditional CVL, if your company is insolvent and your total liabilities do not exceed $1 million, you might be eligible for Simplified Liquidation. This process involves fewer investigations and formal reporting, reducing overall costs and complexity. We’ll work with you to close your business with clarity and understanding.
Members Voluntary Liquidation (MVL)
If your company is solvent but you’ve decided it’s time to close the doors, you’ll take the route of an MVL.
For small businesses, an MVL is a graceful exit strategy. It ensures all debts are paid off and allows the clear and fair distribution of surplus assets to shareholders. We offer comprehensive support for a headache-free process with open communication channels. Our team will conduct a review, liquidate your company and distribute any assets to the relevant parties, letting you wrap up without haste or distress.
Court Liquidation
Court Liquidation happens when creditors or other parties, such as ASIC, apply to the court to liquidate a company that has not paid its debts. The court appoints a liquidator, and the process follows procedures similar to a CVL. For small businesses, this is usually the least favourable scenario as it often comes unexpectedly and involves less control over the process.
This underscores the importance of reaching out to us at the first signs of financial distress so we can find the best outcome and keep you in the driver’s seat. Early engagement with experts can often help avoid liquidation, offering alternative solutions like a business restructure to position your company better financially.
Provisional Liquidation
Provisional Liquidation can safeguard your company. This option temporarily places a company under the management of a court-appointed liquidator. This step protects a company’s assets during disputes or mismanagement concerns that might otherwise lead to closure. It’s an effective interim measure, ensuring stability and oversight when there’s a risk of assets being improperly handled or company rules being breached. Appoint us as your provisional liquidator, and we’ll do the heavy lifting while an issue is being resolved, preventing further damage and protecting your company’s longevity.
The 5 Steps for Small Business Liquidation
Here’s a simplified breakdown of our steps for small business liquidation, keeping things straightforward and stress-free for you.
1. Appoint Your Liquidator
When you appoint us as your liquidator, leave things in adept hands—all you need to do is sign.
We’ll send over documents that require the signatures of all directors and shareholders, making it as easy as possible to get started.
2. Sign and Set the Wheels in Motion
After you sign the documents, a Registered Liquidator will be appointed to your case on the same day within 24 hours. Quick and efficient to keep things moving smoothly.
3. We Will Issue Your Creditors with a Report
Our team will prepare and send a detailed report to your creditors within ten days of our appointment. This report gives them an overview of your company’s current status. At the three-month mark, we’ll provide a Status Report, and if your creditors wish, we can arrange a meeting to discuss any updates directly.
4. We Will Begin the Process
We’ll start managing and selling off your company’s assets. Our team will also reach out to creditors to handle claims and ensure everything is accounted for accurately and fairly.
5. Your Liquidation is Finalised
Once all the pieces are in place and the assets dealt with, we’ll conduct a report to ASIC to wrap up the liquidation process and request your company’s deregistration.
How to Survive Business Liquidation: Minimising Personal and Financial Impact
Here are practical tips on how to survive business liquidation, helping you manage the process with resilience and foresight.
We’re Here to Support Your Wellbeing
Facing liquidation is tough, not just financially but emotionally too. It’s important to look after your mental health during this time. Having a liquidator, you can trust makes a big difference in taking the burden off your shoulders.
As we manage the liquidation process for you, support from peers and mentors can help keep the stress in check and maintain clear-headed decision-making. Liquidation doesn’t have to be the end; when one door closes, another opens.
Mapping Out Your Next Steps Together
We’re in the business of helping businesses—at every stage. With a people-first lens, we can start thinking about what comes next. Whether it’s launching another venture or shifting into a new career path, having a plan helps smooth the transition and alleviates the stress of the unknown.
We’ll Handle Your Legal Duties Carefully
To deliver the best possible outcome, our team ensures all legal loose ends are tied up so you can begin your venture with peace of mind. This includes managing personal guarantees that could impact your financial future. When a business is liquidated, personal guarantees often lead directors to face personal liabilities, which, if unaddressed, could lead to bankruptcy.
We’ll manage the details, from filing final tax returns and ensuring all employee entitlements are paid to resolving any contractual matters. With our support, you can properly close these chapters, preventing further complications and giving you a clean slate to start anew.
Is Liquidation Your Best Option? Get in Touch and Begin Preparing Today
Making the right decisions at the right time is vital. With the right preparation and our expert business liquidation tips and guidance, you can navigate this transition smoothly and set the stage for future ventures.
Get in touch with Mackay Goodwin today. We will ensure your company takes the right approach to liquidation to protect your reputation, finances, and set a solid foundation for new beginnings.
FAQs
How long does the liquidation process take?
The length of the liquidation process varies. While some may extend due to court proceedings, every effort is made to ensure timely and cost-effective completion. Liquidation concludes with the distribution of surplus funds in priority order and the final report to ASIC, followed by deregistration of the company.
What happens to my staff during liquidation?
During liquidation, employees often face job loss and may worry about unpaid wages and entitlements. Legally, they are entitled to claim unpaid wages, superannuation, and other benefits, which are prioritised in the settlement process and according to the Fair Entitlements Guarantee (FEG).
Are directors personally liable for debts when they liquidate?
Typically, directors are not personally liable for a company’s unsecured debts post-liquidation, except for specific obligations like superannuation or secured debts under personal guarantees. There are some exceptions, such as super and potentially PAYG with the ATO, depending on your history of lodging BAS’s.
Can I be a director of another company if I liquidate my current company?
Yes, you can become a director of another company after liquidation. However, ASIC may restrict this privilege if someone has been a director of several failed companies or has been found guilty of wrongdoing in the past.