Liquidation of enterprises
Procedures for liquidation and reorganization of the business are rather difficult ones; they usually take a good deal of time, which the company managing team could spend on new directions of the business. Having addressed the specialists, one can free a lot of time and energy not being distracted by solution of problems of a business, which neither renders any profit nor works effectively. According to the current legislation of Ukraine, three ways of liquidation can be singled out:
Complete cessation of the company’s business
Advantages: incorporators monitor the liquidation process and know exactly that old mistakes will not reemerge after the revocation of the state registration. Unsatisfied creditors’ claims are considered discharged.
Disadvantages: undergoing inspections in all social insurance funds, State Tax Inspectorate that can lead to the reveal of arrears, 3-6 months as the procedure time, relative expensiveness.
Corporate restructuring - merger, accession
In this case business being liquidated ceases to exist immediately upon a merger or an accession with the other juridical person; rights and obligations are inherited by other legal successors.
Advantages: such form of liquidation helps avoid some tax consequences. It is advantageous to companies, which have debts before creditors and no possibility to write them off, or the company has the remainder of capital funds and assets. A large quantity of enterprises with the same incorporators has advantage as well. Controlling agencies treat companies having successors with more indulgence.
Disadvantages: all rights and obligations of a company being liquidated are inherited by a new enterprise, including hidden problems; tax liabilities are not transferred to a successor but are to be paid by a company being liquidated.
Bankruptcy (an enforced procedure for liquidation)
Bankruptcy means that the economic court recognizes the debtor’s insolvency and will announce the liquidation procedure for satisfying creditors’ claims.
Advantage: if there are no funds to settle with creditors, the court recognizes this through the legal procedure and there will be no prosecution after discharge of bankruptcy.
Disadvantages: expensive, 3-4 months as minimum term of the procedure.
Liquidation of enterprises via “change of incorporators” changing director and accounting manager
The principle of method lies in the fact that new incorporators inherit rights and obligations of incorporators of a company being liquidated. This variant of liquidation has its own advantages – small terms and pricing. Actually these actions is not the liquidation as it is – the organization is left in the Uniform Register, continues being itemized in the same tax inspection as before, can be subject to the inspection at any moment with all the problems for the previous managing team that come with it.
Using above-mentioned way makes sense only if the company is really “non-problem”, it means it has no credit indebtedness or tax liabilities, all accounting and tax reporting envisaged by the current legislation has been made up in full and on time (if not on time, all penalty duties must be paid as demanded). In all other cases such way of liquidation of a problem company will not solve the problem, but will most probably add new problems.
Summing it up it may be concluded that the liquidation of companies is the difficult procedure requiring individual approach. There are many variants of the state of affairs, which companies achieve before being liquidated, that’s why the most optimum alternative of a company’s liquidation must be found in each specific case. Mistakes made when a firm ceases to exist can lead to unintended consequences and responsibility: administrative, civil, tax or criminal. The task of our lawyers is to minimize all expenses on the liquidation of companies, completely support not only the process of the registration and the liquidation of a company in a court of registration but the tax inspection too, as well as liquidating a company in a way so that there are no law problems later.
Lawyers of our firm help entrepreneurs carry out all liquidation procedures in frames of the current legislation. Introduction of the record on deregistration of a company in the Uniform State Register of Enterprises and Organizations is the final result of the liquidation.