Ferdinand OS Focacceria BLOG The Cost of Liquidation

The Cost of Liquidation

Cost of liquidation is a key step in closing down a business and distributing any assets to creditors. However, the process can be complicated and the costs involved can seem intimidating. Forbes Burton has a team of experts in the field who can offer expert advice tailored to your individual circumstances.

One of the biggest costs is paying a liquidator. These are licensed insolvency practitioners who oversee the winding up of a company and its affairs. They will first assess the company’s assets and liabilities to determine the net estimated liquidation value. This is calculated by deducting the total liabilities from the adjusted tangible asset values. This figure is then multiplied by a discount factor, which takes into account the speed of sale and prevailing market conditions.

The Cost of Liquidation

Another cost is the legal and accounting fees that may be required during the process. The amount of these will vary based on the complexity of the case and specific professionals engaged.

There are also miscellaneous costs, such as the costs of various types of insurance a liquidator might have to put in place and statutory advertising costs (by law a liquidator has to advertise their appointment). These can add up, particularly in larger cases.

Directors may be tempted to avoid liquidation because of these fees, but inaction will usually cost them more in the long run than the initial costs associated with the liquidation process. If you are considering winding up your business, speak to an expert at Forbes Burton today.

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