Liquidation of a legal entity with debts

Liquidation of a legal entity (company) is a process that occurs when the enterprise is closed and its legal existence is terminated. This important stage in the life of any organization requires detailed planning, compliance with legal requirements and interaction with various interested parties in the liquidation of the enterprise. In general, a legal entity can cease its existence for various reasons, such as: lack of funds to continue its activities, systematic violation of legislation, achievement of the purpose for which the organization was created, etc. In this article, we will consider what types of liquidation of a legal entity (company) exist in Ukraine.

Today in Ukraine there are several possible options for the liquidation of a legal entity.

The main and most widespread are the following types, namely:

• Voluntary liquidation or termination of the existence of the enterprise by decision of its founders (participants). This version of the termination of the organization involves drawing up a protocol in which the voluntary expression of will of the participants about liquidation is fixed. The ultimate goal of this type of liquidation is the exclusion of the enterprise from the state register of legal entities and the entry of a record accordingly. The disadvantages of this type of liquidation are that it takes a considerable amount of time, as the procedure involves compliance with legislation, dismissal of employees, payment of wages and other debts to creditors, inspections by authorized bodies. And therefore it is not always suitable for everyone.
• Termination of the existence of the enterprise due to a change of its manager, as well as the composition of participants. This variant of the liquidation of a legal entity can be called a quick method, since the enterprise is not completely liquidated with an entry in the state register, but only the transfer of rights and obligations from one owner to another occurs through the purchase of a share in the authorized capital. That is, the organization changes its leader and members. It is best suited for those legal entities that want to get rid of their organization as soon as possible, even if they have debts at the same time.
• Termination of existence of a legal entity by court decision.This option is possible in such a case, when the enterprise was created with significant violations of the legislation, which cannot be eliminated independently with the help of the participants of the legal entity or the authorized state authority. The decision to liquidate the organization is made by the court, and it also appoints the liquidation commission for the case.
• Liquidation of the enterprise through the bankruptcy procedure. The initiator of the procedure can be directly both the creditor and the debtor himself. It is best suited for legal entities that have significant debts to creditors, because during the bankruptcy procedure there is a moratorium on meeting the demands of creditors, and the court takes appropriate measures to restore the work and activities of the organization itself.
• Reorganization of the enterprise, which can be carried out by means of a merger, merger, division and transformation of a legal entity. During the reorganization, the legal entity also ceases to exist, but all its rights and obligations are transferred to the new (other) enterprise in the order of legal succession.

In what cases should you contact a lawyer for company liquidation?

Each variant of the liquidation of a legal entity in practice has its own nuances and monetary value. And therefore, depending on your situation, for the best choice of a satisfactory type of liquidation of the enterprise, you need to contact the specialists of your field – the Prykhodko and Partners law firm.

Our team of lawyers has many years of experience in the field of liquidation of legal entities, so we will be able to carefully study your situation, offer the best liquidation option and explain its component cost based on your needs and the characteristics of the enterprise. Get in touch!