Why liquidation is a benefit to a company


The liquidation of a business is an excellent tool to use when the time is right.  It is usually the best solution for business owners whose businesses cannot pay its debts.  In South Africa, it is usually the fastest way to get rid of financial difficulties and then get back on the right track almost immediately.  This article explains how liquidation of an insolvent business in South Africa can benefit your business. 

When a business is struggling, it can be hard to see a way forward. But by liquidating, the business owner can wipe the slate clean and start again. Discuss with us how Liquidation can help your business to survive.

How Liquidation can benefit an Insolvent Business

Liquidation can help your business to get rid of debt and this in turn enables the business to start over with a clean slate.  After Liquidation a Liquidator is appointed who will take charge of creditors. This means that you do not have to lie awake at night any longer as the liquidator will deal with creditors so that you do not have to. By liquidating your business, you will be able to move forward and concentrate on your future plans.

How will Liquidation Get Rid of Debt

One of the key benefits of liquidation is that it writes off the debt of the company.  When a company is liquidated, a process called “ concursus creditorum”  is established. This means that all the creditors must come together.  One cannot take legal action over the others and all must wait for the liquidator to wind up the company.  The winding-up process after a liquidation allows for the liquidator to sell assets (if any) and divide the proceeds amongst creditors in a certain prescribed order.  Liquidation is a structured process that takes care of the creditors in a certain manner. This will help you to have reduced stress levels or being harassed. You can then focus on the future and grow your business again.

Start with a Clean Slate After Liquidation

Another important benefit of liquidation is that it will allow you to start with a clean slate. Once the company is liquidated, the business will be free from debt and can continue.  This will take your mind of the worry and fear and give you the peace of mind to focus on future plans so that you can move forward.

Liquidation Helps you to Get Control Back of Your Cash Flow

When there are no creditors to pay, you gain control of your cash flow.  You can use the new cash flow after liquidation to grow your business instead of fighting battles to keep it going. There is a big difference in running a company that is debt free as opposed to fighting to survive every day.  Your cash flow will be your own after liquidation. That will help you to grow your business and create wealth.

Liquidation Stops you being Harassed by Creditors

One of the most unpleasant aspects of financial difficulties is the constant harassment from creditors. By liquidating your business, you will be able to stop being harassed by creditors and regain control of your life. The creditors will deal with the liquidator and not with you.

Liquidation Helps you Overcome Fear and Worry

Financial difficulties usually cause fear and worry. After liquidation you should be rid of the fears and worries and move forward with confidence.

Keep Your Assets and Continue with Business but Without the Debt

It is possible to keep your company assets (if the company has assets) by purchasing it back from the liquidator.  This will allow you to continue with the business but without the debt.


In conclusion, liquidation of an insolvent business in South Africa is a valuable solution for entrepreneurs who are struggling with financial difficulties. This process will help you get rid of debt, start with a clean slate, regain control of your cash flow, stop being harassed by creditors, overcome fear and worry, and keep your assets while continuing with your business.