Liquidation

Voluntary liquidation is usually the right way to terminate a company that is sufficient, i.e. a company that has more assets than liabilities.

Sufficiency assessment

When assessing whether the company is sufficient (i.e. whether its assets are greater than its liabilities), it is important to bear in mind that the assets side of the company must be valued on an executive basis and not based on book values (which can be higher or lower than the executive values).On the liabilities side, it is also important to take into account hidden decommissioning costs. These may include, for example, dismissal pay for staff or outstanding guarantee commitments. Each industry has its own particular provisions. If this calculation is incorrect, the company is likely to be declared bankrupt by the liquidator.

When assessing whether the company is sufficient, it is important to bear in mind that the assets side of the company must be valued on an executive basis and not based on book values
Erik M Gabrielsson

How much does liquidation cost?

There are several specialised companies on the market which offer liquidation at a fixed price. The liquidation fee is then often calculated as a percentage of the company’s assets. A prerequisite for the quoted prices is almost always that the actual liquidation has already taken place and that everything that remains in the company is a cash balance and possibly some unpaid tax liabilities. The prices offered by these operators are often very competitive and it is therefore usually a good idea to hire them. A law firm is rarely able to compete with these offers as far as prices are concerned.

The prices offered by these operators are often very competitive and it is therefore usually a good idea to hire them. A law firm is rarely able to compete with these offers as far as prices are concerned
Erik M Gabrielsson

It is more fitting to hire a lawyer when the proceeds of the company are either very high (as lawyers are paid mainly by the hour worked and not based on a percentage of the assets) or when extensive and perhaps even complex resolution measures are to be taken. This may involve, for example, dismissing staff or decommissioning assets for a longer period of time.

How long does liquidation take?

After the liquidator has converted the assets into account balance, the liquidator calls unknown creditors for a period of six months and, on completion of the liquidation, the remaining funds are distributed to the shareholders according to their respective size.

Compulsory liquidations also exist. In these cases, it is often the Swedish Companies Registration Office that has appointed a liquidator for a limited liability company because, for example, the board of directors is not complete or an annual report has not been submitted in time. In these cases, a lawyer is almost always appointed by the Swedish Companies Registration Office.

After the liquidator has converted the assets into account balance, the liquidator calls unknown creditors for a period of six months and, on completion of the liquidation, the remaining funds are distributed to the shareholders according to their respective stake

Erik M Gabrielsson
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