Company liquidation doesn't have to mean the end of the road…

Company Liquidation Doesn’t Always Mean the End

Authored by Phil Meekin

Phil Meekin

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Approximate read time: 3 minutes

Company liquidation is often viewed as a last resort for directors after all attempts to save the company have failed, and there’s no feasible way to bring things back from the brink. Understandably, the owners of the business might consider themselves a failure along with the company.

However, despite the apparent doom and gloom of having to close the doors of a company, which you’ve no doubt invested a lot of time and effort into trying to make a success, liquidation doesn’t always mean the end of your business.

Insurmountable problems

For context, Victorian England was heavily dependent on horses – used to transport goods and people. There were tens of thousands of horses in London alone and as the human population grew, so too did the demand for more horses. Unfortunately, the average horse produces about 16 kilos of manure a day and 2.4 gallons of urine. In New York, there were well over 100,000 horses, producing 1.5 tons of manure and an awful lot of urine – daily.

As a result, there were real hygiene problems in the streets of all large cities. The problem came to a head in 1894, and The Times newspaper predicted: “In 50 years, every street in London will be buried under nine feet of manure.” – lovely.

However, by 1912, the tables had turned. The motor car was introduced, and demand soon outstripped that for horses. Ironically, the car was hailed at the time as an environmental saviour.

Many business owners over the years have faced insurmountable problems – situations which appeared to be lost causes, when failure seemed inevitable. Very few businesses go through their entire trading lives without facing cash flow shortages at some point, and it may be just a short-term issue or could be so severe that they threaten to close the company.

Dealing with the problems

Just in the way that the Victorians seemed to be facing an impossible challenge, financial issues don’t always have to result in a company’s liquidation.

If you deal with the problems early enough, your company could recover and carry on trading without having to close. There are several procedures which allow a company to continue trading while fixing its financial issues, although which ones the company can feasibly apply for will depend on the severity of those problems.

Find out more about Company Recovery

Surviving liquidation

Even company liquidation doesn’t have to mean the end of a business. Henry Ford, who made a massive contribution to solving the horse waste problem – had two company failures before forming the Ford Motor Company. Despite the failure of the Detroit Automobile Company and Henry Ford Company, Ford had the spirit and foresight to start again – and as they say, the rest is history.

Today, insolvency procedures exist that allow you to start up another business even if your previous attempts have been unsuccessful. You will probably have to use a new trading name, and depending on which arrangement you end up undertaking, you may be able to purchase assets from the old company.

More information about your options for company closure

In summary

If you’re running a business which is financially, well, in the proverbial, the worst thing you can do is ignore the problem. You need the advice of innovative and forward-thinking specialists; licensed insolvency practitioners, who can come up with commercially aware solutions suitable for your company. If you act quickly enough, you could rescue your existing company, or continue business in a new one.

Just as the Victorians encountered a seemingly insurmountable problem with horse waste, a business can emerge from a difficult time and take a new, prosperous direction.

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