Creditors and owners involved in a company or companies in liquidation will be keen that the liquidator appointed liquidate assets as soon as possible, in order to progress the liquidation process and bring about liquidation sales enabling creditors to be paid, and the company in liquidation to end.
What is liquidation value?
This is the value given to an asset being sold in a liquidation process. The liquidation value of an asset of a company in liquidation will often be lower than the market value of an asset that has been sold on a going concern basis.
Going concern value
A going concern value for an asset, whether that be a liquidation sales going concern valuation, an administration sale going concern valuation, (sometimes by way of a pre-pack administration sale), or simply by selling a company’s assets on a going concern basis, will usually obtain a higher price than a liquidation value sale of the assets.
- In a going concern sale, there is often more time in which to market the assets, therefore increasing the interest and inevitably increasing the value of the assets to be sold.
- The fact that an asset is being sold as a going concern rather than in a liquidation sale of a liquidated asset, as part of the liquidation process following a liquidator being appointed over a company liquidation, is that on a going concern sale the company selling the asset is likely to remain in business and therefore the buyer has some comeback on that asset. There is also inevitably more time for the seller to negotiate with the buyer, and for a sale at market value to be reached.
At Francis Wilks & Jones we act for businesses in all types of asset sales. These may be going concern sales or they may be liquidation asset sales, which will obtain a liquidation value. We also work with inventory liquidators who are established in the liquidation business, and can put you in touch with our contacts if you are concerned about the liquidation value or the going concern value of an asset. Contact us to discuss your concerns and we can talk through the options with you.