The three major classes are: As cash is generated from the liquidation sale, creditors are paid in that order.
If a company needs to liquidate its assets quickly, there are businesses that specialize in liquidation.
A business could liquidate most or all of its inventory as part of a move to a new location, thereby saving money on having to transport all of it to a new storefront.
The biggest downside of inventory liquidation is that, in many cases, the timetable for liquidating assets is short, so the discounts are steep and the cash earned is much lower than the retail value.
While the process of closing a business is very difficult for many reasons, it is important to make sure you get the best value for your assets, pay your employees, satisfy your creditors, and comply with state and federal laws.
There are variety of reasons to close a business, including poor results, owner retirement or poor health, or the loss of a franchise arrangement.The companies that earn their living through liquidation work are stereotypically thought of as bottom-fishing scavengers that profit from the misfortune of others.These stereotypes have become dated as more and more retailers find that liquidation can be a valuable means to an end.Further, the professionalism and sophistication of some liquidating firms have evolved so dramatically in recent years, many retailers have found that liquidators can be valuable partners with resources necessary to achieve certain goals.Many of you are familiar with the "traditional" approach to inventory liquidation through a bankruptcy.