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In 2020, it is sadly a very familiar sight as many retail shops and businesses are being forced to close due to the impact of COVID-19.
With many people continuing to work from home, the UK’s high streets are ‘hanging by a thread’, according to Helen Dickinson from the British Retail Consortium (BRC).
But what exactly is a company’s financial situation if they are announcing a going out of the business sale?
Does it mean the company has entered liquidation or is the business just being wound up?Going out of business salesSeeing a company going out of business may not always mean that it is insolvent.
Sometimes it is a solvent company that is deciding to close down for a reason, such as a retirement, a merger or takeover by another company, or the business is no longer required.Whilst a solvent limited business does have to go through a liquidation process, usually, an MVL (members’ voluntary liquidation), its assets, any stock and equipment, will be sold off by the insolvency practitioner/liquidator and the proceeds will be used to pay fees, tax commitments, directors and shareholders.
So, whilst it is technically a liquidation sale, most solvent companies preparing for voluntary liquidation will plan ahead and hold a going out of the business sale in order to realise the maximum value from its assets, remaining stock and equipment prior to starting the liquidation process.An administration pre-pack saleWhen a company goes into administration, it is usually insolvent and is under serious threat from its creditors.
