A colleague recently asked me to help him out in a matter relating to one of his clients about suspending business activity for various reasons. The clients, who were European, flexible and open-minded and used to changes in trading companies, understood that the situation in which they found themselves would irrevocably lead to a creditors meeting. And this certainly seemed to be the case.

But upon analyzing the exact circumstances of the situation, the historical and current balance sheets, I proposed that a creditors meeting was not always, at least initially, the best solution.

In their situation, waiting to receive certain payments and assets with sufficient value in the market to at least cover the losses and debts, it was worth starting the process of liquidating the assets to check if they really did cover the debts or not and, in which case, the company would see the danger of the creditors meeting.

For this reason, the valuation of a company’s assets in liquidation can be higher than their value in a creditors meeting.

So, well advised and always observing commercial law, a properly arranged liquidation can be much more useful than a creditors meeting.

See you soon!

 

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