And their directors and owners too
A long-abandoned industrial site that’s now overgrown with weeds and spooky legends?
A bar ringing the bell to call time on everybody’s fun too soon or reaching the end of an exciting chapter in a book or the story itself?
Closure has long had a dual meaning – depending on your point of view.
Some people will see nothing but negative connotations but this is all entirely dependent on their own circumstances and point of view.
As an example, look at a business that has extensive debt and can only make minimum repayments on some of its liabilities at that.
The owner or directors will be putting all their available energy and bandwidth into trying to solve these issues and deal with the associated problems that arise from falling into arrears including demands for repayment from creditors.
They won’t have sufficient capacity to fully commit themselves or their business to becoming profitable again or producing a plan to clear the existing debt.
This is where the positive implications of closure can be truly felt and understood.
Firstly, a limited company with outstanding debt is allowed to close down and the debt associated with it will also end when the business does.
This is crucial as it allows the owners to move onto their next venture – whether it’s starting a new business with a clean slate, travelling, retiring or moving into a new profession – without any debt following them or stopping them from achieving their aims.
Creditors will be unlikely to receive 100% of their owed debts but they might receive some recompense through the sale of any company assets which would go into a central fund to be distributed after the business finally closes.
They will also be able to have closure – not wasting their time, effort and even more money spent chasing amounts that debtors are unable to pay back in full or in some cases, in part.
In insolvency, the word used for closure is liquidation but essentially means the same outcome for a business.
The most common form of liquidation is known as a Creditors Voluntary Liquidation (CVL).
In a CVL, a licensed insolvency practitioner takes over the relationship with creditors from the very beginning of their appointment and handles all contact and correspondence until the end of the process.
There is a formal legal timeline to be followed during a voluntary liquidation but the process could be completed in two weeks from the date of the initial advice and consultation meeting to the final shareholders and creditors meetings which see the business formally placed into liquidation and closed.
In the last year alone over 90% of corporate insolvencies were CVLs proving it’s effectiveness and affordability.
However not every company that chooses to close through liquidation is insolvent.
Any business that can pay off all of its debts within a 12 month period can close using a process called a Members Voluntary Liquidation (MVL).
As well as being the most efficient and effective way of closing a business that doesn’t have unviable debt, it can also give directors a tax advantage too.
Closure is not a negative, it is a positive
When disciplines as disparate as science, religion and art reach a consensus and stress the importance of closure then they’re probably onto something.
It equally applies to businesses too.
When there’s loose ends and directors can’t fully commit all their energies to improving their prospects and pushing their businesses forward then they’re at a disadvantage.
Even with the best will and intentions, sometimes it’s not possible for a company to survive or recover if it’s debts are too onerous to service.
Sometimes the correct decision might also be the hardest but once owners and directors realise this, then the sooner they can explore liquidation and the better it is for everybody involved.
They will be able to outline all the available options and likely timescales once they understand your circumstances.
Occasionally there are alternatives to liquidation but even if there aren’t, they will be able to give you a comprehensive and complete roadmap to follow which will ultimately lead to a brighter future.