Liquidation of LLC with debts

The liquidation of an LLC with debts has always been a relevant topic in the field of entrepreneurial activity. This is explained by the fact that the company ceased to exist for various reasons, however, having certain debt obligations to creditors, it could settle with the balance of its assets, while not necessarily repaying all of them. This makes this procedure popular among businesses. And during the period of hostilities on the territory of Ukraine, the liquidation of enterprises is becoming more and more widespread. In this article, we will consider how to liquidate an LLC with debts and what methods exist for this.

From the analysis of the legislation of Ukraine, it can be said that today there are 2 main types of ways to terminate the activity of an LLC: voluntary and forced.

Voluntary ones include self-liquidation, liquidation through reorganization, merger, division or merger, as well as a change of the director of the enterprise and its founders.

Forced measures include the bankruptcy procedure of a legal entity and liquidation by court order.

Let’s consider in more detail each option for the liquidation of an LLC:

• Self-liquidation – occurs when the participants of the enterprise independently decide to terminate the existence of their organization by creating a liquidation commission. In small enterprises, the liquidator can be the director of the organization, who makes the final decision to terminate the existence of a legal entity.
• Liquidation through reorganization, merger, division or merger is the process of termination of the enterprise, as a result of which its property and liabilities are transferred to other legal entities.
• Liquidation due to the change of the director of the enterprise and its founders is one of the popular ways of terminating the existence of a legal entity, in which the founders of the enterprise and its director are replaced. It allows the organization to continue its existence, but all rights, duties and responsibilities are transferred to new persons. It is important to note that this process is completely legal and allows you to achieve the goal relatively inexpensively and in a short time.
• Liquidation due to a court decision – occurs when violations were committed during the creation of a legal entity that cannot be corrected independently by the members of this organization or the relevant state authority. The court makes a final decision on the termination of the existence of a legal entity.
• Liquidation through the bankruptcy procedure – this option is regulated by a separate legal act, namely the KUzPB and is suitable when the company has significant debts to creditors. After all, during the bankruptcy procedure, creditors do not have the right to collect overdue debts from the debtor, since there is a moratorium on meeting their demands. Also, the bankruptcy procedure provides for the implementation by the court of appropriate measures to restore the debtor’s solvency (rehabilitation), which makes it possible in practice to restart the activity of the enterprise from the very beginning of its creation. And then only after applying all these measures, if they did not give any result and liquidation of the enterprise itself takes place. However, there are advantages here as well. Because the court can satisfy creditors’ debts not in full, but only at the expense of the debtor’s existing property. Therefore, if your LLC has significant debts to creditors, the bankruptcy procedure is a good option for their repayment.

It is also worth noting that, in general, the liquidation of an LLC with debts is not a simple procedure in practice, and therefore, in order to avoid mistakes during its implementation, you should contact the experts in your field – the Prykhodko Partners law firm. The lawyers of our company will not only help you solve your situation, but will also select the most profitable options for the liquidation of an LLC with debts, both in terms of price formation and time period. And this, in turn, will give you the opportunity to choose the best way to liquidate the LLC. Get in touch!