Why a company liquidation could help

Everybody and every business has a breaking point that they can’t endure past.  Some wise people will know exactly where this is but others will find through a combination of bad luck or bad judgement. 

In November 1980, the undefeated Panamanian middleweight boxing champion, Roberto Duran, was regarded as one of the greatest fighters to have lived. 

Known as “fists of stone” he was known for his aggressive and almost foolhardy attacking sense. He would literally try to scare and bludgeon his opponents into submission or knock them out through sheer force of energy. 

Five months earlier, he had beaten another of the division’s legendary fighters, Sugar Ray Leonard, to take the title and assumed that the rematch would follow a similar pattern. 

What actually happened was one of the biggest upsets in boxing history as Leonard delivered such a surgical, measured and painful beating of his opponent that the unthinkable happened. 

Duran quit. 

The previously indomitable and undefeated Panamanian wild man surrendered in the ring, telling a disbelieving Leonard and referee “No Mas” – Spanish for “No more”. 

In the most public circumstances possible, one of the world’s great athletes found himself at his breaking point and reacted accordingly. 

He would once again be world champion and is still spoken of with reverence and praise by boxing fans but the lesson of Duran is an important one for any business owner or director that is taking a metaphorical beating at the moment.  

You can stop it at any time you choose when you realise you’ve reached your own point of No Mas.

How could a company liquidation help?

Many people in a tough situation become concerned and fixated with one thing, stopping the pain. 

It’s an understandable response but it ignores the other benefits and advantages that a company liquidation would bring. 

  • Paying off debts

It’s accurately assumed that if a business closes through liquidation then all outstanding debts are written off.  This isn’t as straightforward as it sounds.  

In liquidation, a liquidator will assume control of the business in order to dispose and sell of company assets to raise as much money for creditors as possible. This is their prime consideration in a company liquidation.  This is then used to pay creditors whatever can be raised, with any remaining debt likely to be written off instead. Creditors will be unlikely to receive 100% of their owed debts but they will probably receive some recompense. 

  • Ends uncertainty

One of the worst things for a company that is struggling to balance the books is the sheer uncertainty of events.  Some weeks are better than others so for a day or so it might look like the business is returning to profitability but a bad couple of days will mean that these gains are wiped out and they are then struggling to meet all their commitments as they fall due again. 

A company liquidation ends this uncertainty for everybody associated with the business allowing them to move in a new direction without guilt or concern about what else they could give or do to change a situation that might not have been recoverable in the first place.

  • Starting again

Another benefit of a company liquidation is that it clears the slate for a new director and allows them to begin a new company with no overhanging debts or baggage from the previous business.  Sometimes a business owner can do everything they can to keep a company afloat but for many different reasons, this can’t be achieved. 

Using a liquidation process to close a business means it is a complete, full and final way to finish the company and start over with a fresh canvas, using the lessons they’ve learned from their previous experience to guide them. 

A company liquidation does also have its own difficult areas for a director to navigate. 

As well as the loss of control of the business as a liquidator begins the process of asset disposal, might come a feeling of resistance and residual pride. 

There might also be the feeling that things can work if they do one thing differently or try another strategy instead but this is their instinctive drive and leadership skills activating without considering the full picture. 

No entrepreneur likes handing over control but this is not a usual business situation, it’s in the endgame so they should concentrate their energy and emotion on their next venture and how they can begin that as strongly as possible. 

Similarly, a company liquidation is not free. It costs money for the liquidators fees and other expenses and these have to be paid for, although they can often come from the proceeds of sales of company assets. 

A company liquidation might be the right solution for a business but like all important decisions it shouldn’t be taken lightly. 

This is why we offer a free initial consultation for any director who wants to discuss their next strategic move with an impartial, expert advisor. 

One of our team will be able to outline all the options available to them based on the unique circumstances of their business when they get in touch. 

Sometimes a liquidation might be the only option – other times it might be one of a range of choices they could make depending on their end goals and ambitions. 

The important thing is to get in touch and work through their ideas and decide on a direction of travel instead of just enduring more unnecessary pain and discomfort. If you or your business are at the point of “no mas” then make a far easier decision first