Is it a good idea to buy back a business in liquidation?

Buying back a business in liquidation can be a good solution, to save money and can present many opportunities. However, it is necessary to be well informed beforehand and to know why the company is in liquidation, to see the extent of the problem and to know if it will be possible for you to redress the company.

What exactly does the compulsory liquidation of a company mean?

The initiative of a judicial liquidation is to close a company in difficulty, so that it can repay its debts. The liquidation of a company can be requested by any natural or legal person, regardless of the field of activity, it is simply necessary that the company is in default of payment and that it is impossible for it to go up the slope.

This declaration must be made to the commercial court and must be done quickly so that the costs are stopped. It is necessary to still be able to carry out a transfer of assets and still be able to settle creditors. This transfer can lead to the sale of all or part of the material assets and sometimes the premises and the company itself.

The repurchase in liquidation, what it is possible to do

You should know that for the redemption of a business in liquidation, there are different formulas to proceed. Whatever your choice, ultimately, you will have to make the payment in the form of a bank check and that in cash, you will not be able to spread the payment. The possibilities for redemptions are:

  • For an auction, the sale is public and the business will be transferred to the person who offers the highest amount, from a floor price.
  • The sale is made in the form of deposits of offers, the goods will once again be sold to the highest bidders, the difference with the auctions is that it is not a public sale.
  • The sale is made following an order of the judge-commissioner, it is the agent who chooses the buyer according to the various offers proposed.

What to know when buying a business in liquidation

There are never anything but good sides when making this type of buyout, there are advantages but also drawbacks, it is important to know them before embarking on this buyout.

The advantages of redemption

  • The purchase price is very advantageous, it is often sold off to be able to meet debts
  • An existing clientele
  • A quick buyback of the business, it can be done in a few days
  • If the material is also taken back, the activity can resume very quickly
  • Possible material and human restructuring
  • Sometimes the possibility of finding a rare property, with an excellent location

The disadvantages during the redemption

  • The purchaser’s obligation to have the total amount for the purchase
  • It is difficult to get a loan in the allotted time
  • Following the takeover, banks will be reluctant to lend to a company that was previously in liquidation
  • Suppliers and customers may be less present and reluctant to deal with a new owner

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