The Role of Valuation in Asset Liquidation: Determining Fair Market Value
When an organization finds itself falling on hard times and having to go into liquidation as a result there are a number of different steps that need to be followed. One of the main ones is that the assets of the company will be sold off in order to settle the liabilities which are owed to creditors. As such, valuation is clearly an incredibly important part of the liquidation process, but who gets to decide what assets are sold and determine how much they are worth? All will be discussed in the below article.
In the majority of cases, the creditors of the organization are those who have the final say in what happens to the assets of the company. This is due to the fact it is the creditors who are owed money by the company and as such, they have a valid interest, given they are trying to recoup as much of the money they’re owed as possible. The creditors are usually responsible for hiring a liquidator and then that liquidator has to act in the interests of both the company which is being liquidated and the creditors. This liquidator will be responsible for taking charge and overseeing both the valuation and sale of the assets to get the best price possible.
There are certain situations where this isn’t necessarily the case and instead, shareholders can have a bit more of a say over how various assets or both are valued and sold. For instance, if the organization in question is a publicly traded business then the shareholders of the business might need to approve asset sales. In other cases, the court might need to appoint a receiver to oversee the liquidation process and also make sure that various parties are treated fairly.
The Role of Valuation in Asset Liquidation: Determining Fair Market Value
Comments
Post a Comment