Liquidators sell assets associated with a business entity, either as part of a court-ordered dissolution process or a voluntary liquidation. They settle outstanding liabilities and prioritize debts, paying them off as assets are sold. Different types of liquidators exist, and their functions vary by country.
Liquidators are professionals who take on the task of identifying and selling all assets associated with a business entity. A liquidator may be appointed by a court as part of a company’s dissolution process or hired by the company as part of a voluntary liquidation process. In either case, the liquidation professional will be involved in settling any outstanding liabilities aided by the business, thereby paving the way for the final steps of dissolution.
When designated by a court system, the settlement company will assess the current market value of all assets owned by the company. The liquidator will take steps to ensure that the best possible sale price is determined for each asset and will oversee the sale process for each asset. Depending on the court’s decision and the laws governing corporate dissolution in that particular country, the liquidator may prioritize each liability and pay off each debt as assets are sold. When settling debts, the liquidator will take into account any lawsuits that may impact the exact amount that must be paid to each creditor before the company can be legally dissolved.
It is important to note that when a liquidator is functioning under a court order, all proceeds from the sale of assets are first directed towards settling all outstanding debts in accordance with terms determined by the court. Only when the court considers that these debts are settled can the business owners claim the remaining funds.
Companies that voluntarily choose to cease operations may also seek the services of a liquidator. When the intention is to sell a wide range of assets, many companies choose to go with a wholesale liquidator. Wholesale liquidators usually take control of entire inventories and sell the inventory to the largest buyer. Depending on the type and scope of inventory items, the liquidator may look for several different buyers, each for specific subgroups within the larger inventory.
There are also liquidators who focus on liquidating specific types of goods. In that case, the liquidator can buy all the stock and put it up for sale at a retail outlet. For example, a furniture liquidator might buy the stock of a furniture store that is going out of business and resell the items at a profit in its own store. Likewise, a computer liquidator can buy computers and related equipment from a company that is going out of business and resell the items elsewhere for a profit.
With voluntary liquidation functions, it is not uncommon for the liquidator to reach a purchase price with the closing company and make payments directly to the company’s creditors. As in the case of a court-appointed liquidation company, business owners receive nothing from the proceeds until all outstanding debts are paid off.
Different countries regulate the functions of a regulator in different ways. For this reason, it is a good idea to check with the home country before assuming that a liquidator is capable of carrying out a specific role with or without the approval of a court of jurisdiction.
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