How Business Liquidation Impacts You

Whether you are part of a business that is getting ready to undergo liquidation or you are a regular customer or client of one facing this hard time, it’s important to come to realise how liquidation is going to impact you and what you can do to best manage the situation.

Liquidation is a serious, but reasonably common issue and when a company is facing it, it’s going to be a rapid and immediate process that goes down.  Typically doors are closed and no further business is carried out.

But how will this impact you? If you’re an employee of that company or a loyal customer, there are some things that you need to be aware of so that you can best prepare for the process of liquidation.


As an employee, in most cases, your employment with that company is going to be terminated and you will receive a claim form for any current salary, wagers, or holiday pay that you may be due from your previous employment with that company.

This will all be factored into the total cost that the company must pay throughout the liquidation process.

The good news is that your unpaid salary is going to rank in above any unsecured creditors, so this can help put your mind at ease that you are going to be paid in most cases.

The worst case scenario, when business is severely struggling, would be losing your employment without any pay or compensation at all, but this happens in only very rare cases.


If you’re a customer of the company, liquidation will impact you, however not to a very serious or large extent. Obviously you will no longer be able to do your shopping with this company as they are closing their doors, but in addition to that, if you have any credit cards or other contracts with the company, those are going to cease to continue as well.


Another person who will be impacted by liquidation is a guarantor.  This is a person who has agreed to repay a debt that another person took on in case they were to default.

So basically, if you are the guarantor of that company entering liquidation, you may be required to pay off their owed debts, so professional advice should be sought immediately.

Depending on just how much the company going into liquidation owes, this can get to be quite a hefty price tag in some cases.

If the company in question has entered voluntary administration, then the creditor must await the outcome of the administration first and once that’s finished, they can then approach the guarantor.

Hopefully this basic information on how liquidation impacts those who are involved with the business will help anyone wondering what is next for them.  Although all those involved will be impacted in some way, there is plenty of advice out there to help you get back on track. Business insolvency experts are on hand to deal with any concerns and can help make any liquidation process as seamless and as pain free as possible for everyone involved.

All may not be as bad as it initially seems.

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