If your company is facing liquidation due to insolvency, the chances are you will have a number of creditors who you owe money to. One of the jobs of the Insolvency Practitioner is to recoup as much money as possible from your company in order to pay off as many creditors as possible. This is done through a sale of the assets the insolvent business holds.
These assets include property, vehicles, machinery, stock and even the fixtures and fittings of the business premises. Only goods owned by your company can be sold as part of this process, so this means any vehicles or machinery you have on hire purchase, or any heavily mortgaged property will be excluded. Instead, any hired or leased goods will be returned to the leasing company, and the mortgage company repaid through the sale of the property. There is often not enough money to go around in which to pay every creditor in full; therefore some unfortunately miss out.
All assets will be valued by an independent specialist auctioneer or surveyor. This is to ensure the true worth of the assets are realised, as it is in the Insolvency Practitioner’s best interests to get the most amount of money from this process as possible. Despite this, it is inevitable that the goods will be sold below their market value due to the distressed nature surrounding the sale.
There are a number of ways the company’s assets will be sold, and it is the Insolvency Practitioners job to ensure the most suitable mode of sale is identified. The sale could take place through auctions, both traditional and online, or through business contacts of the Insolvency Practitioner or the auctioneer.
A record will be kept of the method by which each asset was sold, who the eventual purchaser was, and how much money was realised. The proceeds received from the sale will then be put towards paying off as much creditor debt as possible before the company is dissolved and officially closed.