Where business ends the liquidation starts. A business begins for the sake of profits. And when it is hard to earn profits and even commence the business on breakeven point. The process of liquidation begins. The wind-up or dissolution of the company is the ultimate activity which is taken by the board of directors. It also happens to safeguard the creditor money and the duties recoverable by the tax and duties collecting agencies. It is not mandatory to initiate the liquidation process by the company. It can be petitioned by the creditors, authorized government official and also by company itself (Laudon & Traver, 2008).
Grounds of liquidation:
No business could be started just because of liquidation. So, there are so many reasons to liquidate the business to protect the interests of stakeholders. By law there are many grounds to liquidate an entity, but, the most common and most practiced liquidating reasons are two which are noted below:
- The company is unable to pay its debts and the creditors are feeling unsafe to recovers the debt.
- The company is at the stage which only suggests to wind-up and dissolution. And it is in the best interest of every stakeholder.
Major concern of liquidation:
As noted above the most common reasons of liquidation are quite similar. Therefore, the major concern of liquidation is also similar to the reasons. By elaborating, the major concern of liquidation is to safeguarding the interests of creditors. Moreover, to release the statutory as well as other liabilities of the company and to properly shutdown the business activities. This appropriation of assets and liabilities is mandatory when an insolvent business has no more options.
Affects of liquidation:
Liquidation means to close the business activities which are actually already in dead condition in most of the situations. Liquidation has affects on assets and liabilities which have to be properly considered and appropriated. The cost of liquidation should met the remaining assets and appropriately disburse to the concern parties. Therefore, the process of liquidation and its proper appropriation needs prioritizing the outstanding.
In the first priority the payment to the creditors is preferential. It is mandatory to firstly clear the outstanding payables to the preferential creditors. Then the other creditors and statutory payables are to be paid to release the liability of the company. And lastly, the remaining amount should be distributed appropriately according to the share percentage to the shareholders of the company. This process should be preceded with appropriate consideration to liquidate perfectly.
What are the core components of Liquidation?
The core components of liquidation business model are assets and liabilities. At the liquidation time it is most favorable to have good assets to liquidate the company appropriately. As liquidation is act of terminating or winding up the business. Therefore, in this case not only the business activities are closed, but steps are also taken to close the books of accounts. Winding up all business activities and clearing the outstanding debt on the entity with the realization of assets. So, the core components are winding up books of accounts and business activities, realizing the cost of assets and paying off the debt and disburse the remaining appropriately.
Do you think Liquidation will ultimately succeed or fail?
The liquidation is totally depends on situation and situations drives you to the activities. However, in my opinion liquidation would be the last option and it should be commenced well in time. Otherwise, a more terrible situation will ultimately affect more to the business. Business is a game of profit and the player should not be treated as failed who have put his best to the business.
Because, it should be considered a part of game, so, it is not about succeed or fail. However, the mandatory is to put the best effort and to perform right business formula, strategies at the right time. If there is a flaw in effort, business formula or strategy it would be treated as fail. At the same time, if there is no flaw in any case then it would be a part of business and should be treated as success to have experience for next time.
How has Liquidation (and similar online services) impacted the travel services industry?
The auction services like liquidation and other similar online services have impacted the overall business industry. Therefore, it is not about the single travel services industry, but, it caters the whole industry to liquidate the excess assets and to liquidate the assets to windup the company. So, it is about all business which needs liquidation to perform the step smoothly.
At the end of treatise, it is now crystal clear that when a company is in financial difficulties which cannot be overcome through internal reconstruction or recapitalization measures. It has only one way an external reconstruction which involve, winding up the old company or formation of a new company. The formation of new company needs to replace the liquidated company or its taking over by a new company.
The ultimate impact is on the asset and liability side of the entity’s balance sheet. To properly handle and appropriately dealing with the liquidating activities has utmost importance. It is about winding up properly and devotedly to properly clear the accounts and debts.