Liquidation of business

 LIQUIDATION OF BUSINESS

In connection with the adoption of new tax legislation the issue of liquidation of an enterprise has become the question of the day for many joint-stock and business companies. We offer the interested parties a few liquidation procedures of enterprises, assessing the pros and cons of which, you can always choose the optimal solution.
Prior to the commencement of the liquidation procedure a customer may receive qualified legal advice on dissipating of assets from the companies that are being wound up, related areas of law, etc..
Express-liquidation
Liquidation as a result of bankruptcy of the absent debtor

Selection of the nominal owners and managers

Express-liquidation

This procedure is not a procedure of liquidation itself and, in essence, means the transfer of corporate rights and business management to others with further delayed for some time liquidation of an enterprise in a general way.
During this procedure the amendments on the new composition of members (shareholders, owners) are made to the constituent documents of a company and a replacement of the director is conducted (the changes are introduced to the Uniform State Register). Seals, stamps, primary documents, reports are transmitted to a new owner of a company under acceptance and transfer certificate. Additionally, if necessary, a location (registered address) of an enterprise can be changed.
As a result of this procedure, responsibility for the company’s activities is transferred to new members (shareholders, owners) and a new director. Then, after about a year and a half, the company acquired by new owners is liquidated according to the standard procedure.
Important: The company sold to a new owner is not used in economic activity. The company’s “Buyer” is used a single time, and is not involved in the purchase of other companies. At the request of the client the company’s “buyers” can be also selected among the non-resident individuals.
The scope of this procedure: failure within a reasonable time for a reasonable amount to carry out the liquidation of an enterprise under the owner’s decision.
Pros: relatively low cost, short term to the extent possible, legality, lack of inspections by regulatory authorities, creditor indebtedness and other problems are allowed.
Cons: the company sold to a new owner is not excluded from the Uniform State Register at once (usually only in a year and a half). Also, this method may not help especially when there are neglected problems with tax and law enforcement agencies or creditors.

Liquidation as a result of bankruptcy of the absent debtor

Liquidation as a result of bankruptcy of the absent debtor is conducted under the Article 52 of the Law of Ukraine “On recovery of the debtor’s solvency or declaring its bankruptcy”.
The reason for starting this liquidation procedure is no enterprise (its governing bodies) at its location. This fact can be established under the data of the Uniform State Register and confirmed by the Extract from the Registry.
In contrast to the usual bankruptcy procedure, upon the initiation of this procedure the size of the monetary claims of the creditor against the debtor and the term do not matter. It is also desirable for the initiating creditor to provide the court with the desired candidate of the arbitration manager (liquidator).
Within two weeks after the creditor’s application has been accepted for consideration, the economic court shall issue an order to declare the debtor’s bankruptcy, initiate a liquidation procedure and appoint the arbitration manager (liquidator).
In about 1.5-2 months the economic court under its order shall approve the report of the liquidator and liquidation balance-sheet of the debtor, liquidate the debtor as a legal entity in connection with the bankruptcy. This order of the economic court is considered to be the ground for entering the information about the termination of the enterprise into the Uniform State Register by the state registrar.
The creditors’ claims not satisfied due to the lack of the debtor’s property shall be deemed canceled.
State tax authorities and social insurance funds, receiving statements from the state registrar on termination of a legal entity, shall remove the company from the register as a payer of taxes and duties (mandatory payments).
Any further appeal of the creditors to the Court and other organizations with the requirements to the liquidated legal entity shall not be permitted under relevant procedural law.
The scope of this procedure: the most critical situation (tax due, debt to the creditors). It is advisable to do after changing the ownership and management of an enterprise, that is, when the procedure “Express-liquidation” does not guarantee reliable “liquidation” of an enterprise and the history of its work.
Pros: lawful absence of any inspections, a relatively short implementation period (90-120 days), no additional liability of the members (shareholders) of the debtor for the obligations of the debtor.
Cons: relatively high procedure cost.

Selection of the nominal owners and managers

Sometimes there is a need for the entrepreneurs to withdraw from the members (shareholders) of a business entity, but there are no authorized representatives to transfer the corporate rights to.
Then it is sometimes necessary to put the company into the “sleep mode” or establish a new company to start a new business, but the start date of the business is not yet known.
In such cases, a possible solution could be the transfer of corporate rights to a nominee or the establishment of an enterprise with a nominal founder and manager for the purpose, when the need arises, to transfer corporate rights to the right individuals or replace a nominee for a permanent director.
Such an approach allows us to keep the company in a mode of constant readiness, but the real owner is relieved of the need to monitor the current state of affairs: accounting record-keeping, reporting etc..
Depending on the wishes of the customer we will render services on the selection of nominal owners and managers.

RSS HG.org – Legal Articles

  • Common Mistakes to Avoid When Filing a Workers' Compensation Claim 22.09.2017
    By LeViness, Tolzman & Hamilton, P.A. - Baltimore, MarylandNo one goes to work expecting to become seriously injured while performing their regular job responsibilities. […]
  • Action Items for the Estate When a Solo Physician or Dentist Dies 22.09.2017
    By Matt Dickstein, Business Attorney - Fremont, CaliforniaWhen a solo physician or dentist dies, the doctor's estate must figure out what to do with the practice. Because the doctor practiced solo, there are no partners who will continue the practice. The estate cannot operate the practice because it's not licensed to practice medicine or dentistry […]
  • Ethics Codes for Police 22.09.2017
    By The MacMain Law Group, LLC - Malvern, PennsylvaniaMost police officers enter the force highly motivated and enthusiastic with a true desire to serve the public. […]
  • Workers' Rights While on Maternity Leave 22.09.2017
    By Sidney L. Gold & Associates, PC - Discrimination Lawyers - Philadelphia, PennsylvaniaBefore a worker becomes pregnant, they should take the time to learn about their rights regarding maternity leave and the use of company-provided health benefits for pregnancy and childbirth-related medical needs. […]
  • Home Depot Fined for Selling Dangerous Products 22.09.2017
    By Eckell, Sparks, Levy, Auerbach, Monte, Sloane, Matthews, & Auslander, P.C. - Media, PennsylvaniaCongress established the United States Consumer Product Safety Commission (CPSC) in 1972 to protect consumers from dangerous household products. […]

SUBSCRIBE TO SITE NEWS

Enter your email address:

 Subscribe in a reader