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What is the liquidation of an enterprise? Step-by-step algorithm

In order to avoid delays in the liquidation process, one should contact qualified lawyers
The practice shows that establishing a company is quite easy and simple, but closing a business can be quite problematic. A difficult economic situation, sometimes illogical tax legislation, not always consistent administration by fiscal authorities and the frequent reluctance of business owners to conduct their business in a transparent way creates "shadowing" in almost all areas of business and leads to the fact that today many entrepreneurs are thinking about reorganization or closing a business.

The procedure for liquidation of a business entity is determined, first of all, by its financial condition. If a legal entity has a positive or zero ratio of assets and liabilities, and there are no debts to creditors, it can be liquidated by the decision of the founders. But if the company has no means to make settlements with all creditors, or if there are debts to the budget, liquidation of such an entity shall be carried out through the bankruptcy procedure.

The significant practice of bankruptcy of the specialists of the Law Firm "Patriot" allows us to make a conclusion that in the process of liquidation and bankruptcy, there are many issues not clearly regulated by law, and only the practical experience of lawyers who have repeatedly dealt with the liquidation of companies allows us to correctly circumvent all the "pitfalls" of liquidation.

It should be noted that gaps in the legislation are not the only problem faced by owners of companies in the process of liquidation. Each of these businessmen wants to close the company easy, quickly and without any problems, but the system of work of supervising state bodies often does not allow for quick liquidation. Moreover, as a result of tax audits, offences can be identified that can serve as a reason for bringing the director/chief accountant to responsibility, even to criminal one.

In order not to delay the already not very quick liquidation process and not to complicate your life with unnecessary worries about inspections, it is necessary to contact qualified lawyers who have the appropriate specialization, which minimize the risks, and who will carry out the liquidation in a qualitative and prompt manner.

Before launching the liquidation procedure, it is necessary to conduct a thorough analysis of the company, to conduct an audit of the financial condition of the company and to develop a detailed plan of action to be carried out, both during the liquidation, and prior to it. It is also necessary to take into account that the legislation only contains a general plan and a sequence of liquidation, and besides, there are quite a lot of features related to the specifics of the activity or the business structure of a legal entity, for example, joint-stock companies, insurance companies, public organizations, asset management companies. Therefore, if we are not talking about an LLC that has not performed any activity and has existed for half a year, one should understand that each liquidation case is unique and requires a well-developed strategy and an individual approach.

In order to have a general idea of the liquidation procedure, we shall consider its main aspects.

The legal consequences of the liquidation of a legal entity are, in fact, the termination of its rights and obligations to the state and counterparties without succession. Confirmation that the liquidation has been carried out and the legal entity no longer exists is making an entry in the Unified State Register on the liquidation of the enterprise and its exclusion from the register.

The algorithm of "standard" actions in the process of liquidation of a business entity is as follows:

1) taking a decision by the founder to liquidate the company. For this, a general meeting of founders shall be held, at which a liquidator (a liquidation commission) must be elected, that is, the one who will directly carry out actions to liquidate the company. Decisions taken by the general meeting of founders shall be documented in the form of minutes. After the liquidator (usually the former director) is elected, all the functions and powers of the executive body of the company shall be vested in him/her. The main tasks of the liquidator are as follows: assessment of the company's property, determination of debtors and creditors of the company, taking measures to pay off debts of the liquidated legal entity to third parties, drawing up an interim liquidation balance

2) providing the registrar with a copy of the minutes of the general meeting of founders in order that an entry is made into the Unified State Register on the termination of the company;

3) appeal to the tax office, pension fund, social insurance fund with statements about the liquidation of the company for the purpose of conducting inspections by these bodies. The result of such inspections should be a certificate of the absence of debts to the budget and de-registration of the legal entity. Appeal to the permitting authorities with applications, if the company has been issued licenses, certificates, etc.

4) notifying creditors and debtors of the company's liquidation, setting deadlines and procedures for creditors' addressing with their claims to the company in liquidation;

5) closing bank accounts that will not be used in the process of liquidation;

6) assessment and inventorying of the property of a legal entity;

7) dismissal of employees working for a company in liquidation in compliance with all procedural requirements (consideration of prohibition on dismissal of employees on parental leave, notification of the employment center about the dismissal of employees);

8) drawing up and approval by the minutes of the general meeting of owners of an interim liquidation balance sheet reflecting the presence of debt and the value of the property of the liquidated legal entity;

9) sale of the company's assets in order to generate funds for settlements with creditors, payment of debts to creditors who filed their claims within the prescribed period and entered into the register of creditors in the order of priority;

10) drawing up and approval by the minutes of the general meeting of owners of a liquidation balance sheet after repayment of debts;

11) distribution of property or cash remaining after settlement with creditors among the founders of the liquidated entity;

12) transfer of documents on the legal entity to the archive.

Summing up, we shall state that the following aspects should be taken into account when taking a decision on liquidation of an entity:

— in general, the liquidation procedure takes 6-12 months for an LLC or individual entrepreneur, and this process is quite laborious and time-taking;
— liquidation requires additional funding, namely: payment of state duties and fees, representation of interests, payment for publications, sending letters, receiving certificates;
— attracting external specialists with experience in conducting liquidation procedures will greatly simplify and speed up the whole process, as well as minimize legal risks, make the liquidation simple and safe.

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© 2018, Denys Bondar
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