When confronted with overwhelming financial difficulties, owners often consider whether it is better to reorganize or liquidate their business. In making that decision, owners have many factors to consider, including:
- Nature of the Economy. Is there a place for your business in the current or future economy?
- Nature of the Business. Is there still a market for the business’ products and services, and does it still have profitable employees and customers?
- Assets. What assets does your business have and how can they be utilized or their value maximized?
- Liabilities. What liabilities can be shed or reduced, if any, to enable the business to be saved?
- Personal Liabilities. How will either choice affect the personal assets of owners?
- Future Prospects. How will the liquidation or reorganization affect future employment or opportunities of owners, employees and other stakeholders?
- Maximizing Return. Which choice will enable the business and owners to recover or maximize any return on their investment in the business?
- Going Concern. Is there a going concern value and how can it be actualized or maximized?
- Taxes. What are the tax consequences to the business and owners of either choice?
- Collateral Harm. What harm will either choice cause third parties and stakeholders, and what can be done to mitigate any harm?
- Continuing Obligations. What obligations will remain after a liquidation or reorganization?
- Alternatives. What are the alternatives to either choice or to taking no action at all?
As the stakes are high, either decision should not be made without full consideration and counsel. The attorneys at Brooks, Tarulis & Tibble, LLC can advise you on your decision whether to liquidate or reorganize your business, and how to best achieve either. Should you have any questions or issues please contact us.