Liquidators are professionals who take on the task of identifying and selling off all the assets associated with a business entity. A liquidator may be appointed by a court as part of the dissolution process of a company, or be hired by the company as part of a voluntary liquidation process. In both instances, the liquidation professional will be involved in the settlement of any outstanding liabilities help by the business, thus preparing the way for the final stages of the dissolution.
When appointed by a court system, the liquidation company will assess the current market value of all assets owned by the business. The liquidator will then take steps to ensure that the best possible sale price is determined for each asset and oversee the process of selling each asset. Depending on the ruling of the court 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. In settling the debts, the liquidator will take into consideration any court action that may impact the exact amount that must be paid back to each creditor before the business can be legally dissolved.
It is important to note that when a liquidator is functioning under a court mandate, all proceeds realized from the sale of assets are first directed to settling all outstanding debts in accordance with the terms determined by the court. Only when the court considers those debts settled can the business owners lay any claim to the remaining proceeds.
Companies that are voluntarily choosing to cease operations may also seek out the services of a liquidator. When the intent is to sell off a wide range of assets, the business many choose to go with a wholesale liquidator. Wholesale liquidators often take control of entire inventories and sell off the inventory to the highest buyer. Depending on the type and scope of the inventory items, the liquidator may seek several different buyers, each for particular sub-groups within the larger inventory.
There are also liquidators who focus on the liquidation of specific types of goods. When this is the case, the liquidator may purchase the entire inventory and place it up for sale in a retail establishment. For example, a furniture liquidator may purchase the inventory of a furniture store that is going out of business and resell the items at a profit in his or her own store. In like manner, a computer liquidator may purchase computers and related equipment from a business that is closing and resell the items at another location for a profit.
With voluntary liquidation functions, it is not unusual for the liquidator to agree on an acquisition price with the business that is closing, then make payments directly to the creditors of the business. As in the case of a court appointed liquidation company, the business owners do not receive any of the proceeds from the sale until all outstanding debts are settled.
Different countries regulate the functions of a regulator in different ways. For this reason, it is a good idea to check with the country of origin before assuming that a liquidator is able to perform a particular function with or without the approval of a court of jurisdiction.
