In a company there are so many strategies that need to exist because of the competition in the business world. There should be back-up plan on anything as this will help the company in making sure that business is still right on track. There are people assigned to each department to work on for the business. Each has their own duties. However there are some cases that companies also need to think about what will happen in the future, if they will not be able to meet the needs of their company. It is good if the company is doing well, but if it is not gaining anything, possibly company need to get some liquidation advice.
When company realizes that they are not gaining profit anymore and are not able to pay their debt that is the time when they need to seek liquidation advice. The company will be in insolvency procedures if they no longer meet their financial responsibility. Liquidation of the assets is the best to pay debts. Liquidation is converting all the assets into cash, so that company will be able to pay their debts and then the remaining will be divided to their shareholders. Voluntary liquidation will happen if the shareholders voluntarily decided to distribute the liquidated assets to settle company’s debts. The insolvency of the company will be leading to closing of the business as they are not capable to settle their debts on due time. There is pre pack administration option, which is a deal to preserve the assets by selling it to a third party. The third party can be the owner of the business but it is under a different company name.
The advantage of pre pack administration is the business will still continue since the debts are being covered. They can also continue with the business with the assets and also the employment but there will be regulations followed to protect the employees. TUPE or Transfer of Undertakings Protection of Employment is protecting employees when insolvency is taking place. This is to protect them from losing their job. Transferring employees to another company or letting them go is not that easy. It is difficult to choose the people need to stay and also the people that should be paid as part of the insolvency procedure. But there are laws that they are being covered for that to protect those employees.
These things really happen in every individual or companies who are unfortunately experiencing challenges in their business. There should be legal proceedings to protect ones interest and also the company itself. The liquidation should be only the very least option of paying debts in case that the company is being insolvent. There are strategies that are company should be implementing to prevent immediately the problems occurring in the business. There should be just effective business plan and cooperation of every business owner to prevent the bankruptcy from happening. Closing of the business will not be only affecting the business owners but the people working from there as well.