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Once a business owner decides to liquidate his or her business for financial or other reasons, there are choices to be made as to the method of liquidation, including supervised liquidations: bankruptcy (Chapter 7), an assignment for the benefit of creditors (ABC) or a receivership, and self-managed liquidations: ranging from asset or business sales to mere abandonment. Supervised liquidations transfer the responsibility for the liquidation to a third party leaving the owner without control, while a self-managed liquidation allows the owner to control the liquidation as much as possible but retaining responsibility.  Each has its own risks and benefits, including:

  • Timing. As a supervised liquidation must meet statutory and common law notice and timing requirements they often take longer, while with a self-managed liquidation the owner or the market drives timing.
  • Costs. Professional and other fees can be substantial in a supervised liquidation, but they can be more manageable and controlled in a self-managed liquidation.
  • Notoriety. A bankruptcy is a public proceeding and an ABC requires notices and publications, but a self-managed liquidation can be more discrete.
  • Disruption. It is easier to maintain your business’ operation during a self-managed liquidation.
  • Control. While a prepackaged bankruptcy or ABC is possible, there is no guarantee of the same level of control that a self-managed liquidation can provide.
  • Coercion. A bankruptcy trustee, ABC assignee or receiver can stay or delay creditor actions, but a self-managed liquidation requires creditors to voluntarily agree to stay proceedings.
  • Liability. Since the owner is not in control of the liquidation, the result is generally final and limits claims of illegal preferences or fraudulent transfers. Not so with self-managed liquidation.
  • Responsibility. The owner or designated party must commit the time and expertise to a self-managed liquidation and bares the responsibility.

A business owner has many issues to consider in deciding on how to liquidate a business and the value of experienced and timely legal and other professional advice cannot be understated. As the attorneys of Brooks, Tarulis & Tibble, LLC have substantial experience in business sales and liquidations, please call us with any issues or questions.


This Brief is designed to provide our friends and clients with information regarding the various subject matters covered, it is not designed to take place of legal, accounting or other professional advice. If expert assistance is required, the services of a competent professional should be sought. This memorandum may constitute advertising under the rules regulating Illinois attorneys.

Brooks, Tarulis & Tibble, LLC
1733 Park Street, Suite 100
Naperville, Illinois 60563

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