Net asset liquidation or dissolution is a process followed by businesses to sell their assets and cease operations. The net assets of a firm generally hold a higher value as compared to its liabilities; however, the revenue after the sale is not always the same as the recorded book value.
Business owners usually decide to sell their assets when they are no longer able to pay off debts. The company liquidation Singapore approach is quite different from the voluntary divestment strategy, which is usually preferred to improve the financial efficiency of the company.
The money received after the liquidation of the assets is preferably used to pay off the debts of the company. Note that both private individuals and businesses are eligible to liquidate their assets, including investments, raw materials, equipment, automobiles, and real estate properties.
Liquidating assets due to business insolvency
When a company is not in a position to pay off its due debts, it becomes insolvent and is legally obliged to behave in the best interest of parties to which it owes money. However, if there are no due payments and the business doesn’t have real hope to return to solvency, there is no need to continue trading. It is good for directors to seek advice from insolvency experts regarding procedures for company liquidation Singapore.
At this stage, the best solution to maximize the company creditor’s return is to turn down the company while liquidating assets – this entire process is termed liquidation. An insolvency practitioner must be appointed to handle the assets of the business, and they can be sold to raise money for repaying business debts. These assets can be anything ranging from fittings, fixtures, vehicles, and property.
The process of asset liquidation:
The licensed insolvency practitioner can use several unique ways for liquidation of assets, and selection usually depends upon the type of assets and urgency of funds. In case if there is no immediate requirement for asset liquidation, it is possible to wait for some time and sell them for a higher price in an open market. However, when the funds are needed urgently, liquidators may consider an immediate auction. No matter what method is used, the procedure always helps to bring the best possible value to the assets.
Liquidation, in most cases, is a process of filing for bankruptcy. The process can be followed by companies and individuals as well. In case of liquidation bankruptcy, the court becomes the controller of assets and announces an auction to sell them so that liabilities can be handled. The judge can also appoint a caretaker for the property and the assets of the company or person who is filing for insolvency.
In order to ensure convenient handling of debts and liabilities for your company, it is good to hire a licensed insolvency practitioner in your area. The experienced professionals can guide you better regarding the entire procedure and handle the insolvency practices on your behalf.