If you want to start your liquidation business, then you need to know about the liquidation process. It is a quite complicated process where legal aspects are involved. As a liquidator, you need to sell excess products at low rates. You can collect such products from different sources. For example, you can collect the products from old stock or sell some products returned by the customers.
In this case, a company can hire you to sell their old stock, clear their inventory. You can sell their old or over-stock products at a low cost to pay off their creditors and stakeholders.
Role and responsibilities of liquidators:
As a liquidator, you can collect such products from auctions, shop owners, flea markets and export houses. They have such products available at cheap prices, and you can buy such products and sell them at a higher price. But, maintaining a low price range is the primary aim of any liquidation company and in such cases, you can reduce the cost of the shipment by not staking such products in your own warehouse. You can sell them off from a company and they will ship their products to your customers. This entire process is known as the inventory liquidation process. You need to deal with the products only, not with a business.
Bankrupted businesses:
Apart from that, liquidators can be hired by a business during its bankruptcy. If a business suffers from huge debts and cannot pay off their creditors, they can hire a liquidator to sell their business. Sometimes, liquidators are appointed by the court and as a liquidator you need to sell a business or its products under the supervision of the court.
Pay off to the creditors:
In the case of bankrupted businesses, liquidators can sell the assets owned by the company, and they can sell the products, land, vehicle and other types of assets owned by the company to pay off its debts. They need to collect the amount by selling the business and paying off to its creditors and stakeholders. In this case, company directors can decide to end their operation and trading, and they can appoint a liquidator to transfer their power to the liquidator. Now, liquidators have to deal with lawsuits and company directors cannot take any charge. As a liquidator, you need to settle the inventory, maintain the company’s accounts and face lawsuits on behalf of the company directors.
Secured creditors:
According to the law, liquidators are the secured creditors. They have to be paid first after the company is sold out. So as a liquidator, you have to take your fees or charges for the liquidation process, and then pay off the secured creditors. If you have any excess amounts in hand after paying off the secured creditors and stakeholders, you can distribute the same among the unsecured creditors and investors.
Final Words
The liquidation process can take a month to a year, and it depends on the number of debts you have. As a business owner, if you cannot run your company financially, you can hire such professional liquidators. They will take charge of your company for a limited period and they will sell your company’s assets to recover your debts. If you think you can manage your debts and lawsuits, then the court can appoint a liquidator for your company. You do not have the right to hold the amounts of a lender, customer or a bank.
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