The difference between liquidation, closing down and declaring bankruptcy
Liquidation, closing down, and declaring bankruptcy is all business concepts that inspire dread. But there is a difference among them—a difference that could mean the difference between hitting your target and missing it by miles.
Example
The first thing to know is that liquidation, closing down, and declaring bankruptcy are not the same things. Liquidation is what happens when a company ceases its operations and sells off whatever assets it has left in order to pay off creditors. A good example of this would be Circuit City, which went into liquidation in 2009 after failing to compete with big-box stores like Best Buy.
Liquidation
Liquidation is a very different animal from going out of business or declaring bankruptcy. When a business declares bankruptcy, it’s not necessarily over—in fact, it may still have a chance if it can get some breathing room in order to make improvements and try again with a new strategy.
Closing Down
Closing down, on the other hand, means the company is done for good; any leftover money will go to paying off creditors rather than reopening or operating again under a different name.
A company can also close down for one reason or another without being liquidated or declaring bankruptcy; in these cases, it’s generally because the debt load has become too great for the owners to handle.
Businesses can close for many reasons, but the three main ones are liquidation, closing down, and declaring bankruptcy. There is a difference between each of these, though the terms are often used interchangeably by those who are unfamiliar with them.
Declaring Bankruptcy
Declaring bankruptcy is a process in which a person or business legally declares that they cannot pay their debts. In some cases, it’s the only way to get out from under an insurmountable pile of debt. Bankruptcy is a last resort and usually happens when the debtor has no other options.
The three basic types of bankruptcies are Chapter 7, Chapter 13, and Chapter 11. In each case, the individual or business must file for bankruptcy in court. The judge will then decide if the filing meets certain criteria for eligibility, which varies depending on the type of bankruptcy being filed for.
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Manti, Utah
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Manti, Utah
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Birdseye view of Manti and the Sanpete Valley, August 2004
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Location in Sanpete County and the state of Utah.
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| Coordinates: 39°15′53″N 111°38′20″WCoordinates: 39°15′53″N 111°38′20″W | |
| Country | United States |
| State | Utah |
| County | Sanpete |
| Founded | 1849 |
| Incorporated | 1851 |
| Founded by | George Washington Bradley and Isaac Morley |
| Named for | A city in the Book of Mormon |
| Government
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| • Mayor | Korry Soper |
| Area | |
| • Total | 3.15 sq mi (8.17 km2) |
| • Land | 3.15 sq mi (8.17 km2) |
| • Water | 0.00 sq mi (0.00 km2) |
| Elevation | 5,611 ft (1,710 m) |
| Population
(2020)
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| • Total | 3,429 |
| • Density | 1,088.5/sq mi (419.7/km2) |
| Time zone | UTC-7 (Mountain (MST)) |
| • Summer (DST) | UTC-6 (MDT) |
| ZIP code |
84642
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| Area code | 435 |
| FIPS code | 49-47730[3] |
| GNIS feature ID | 1443136[2] |
| Website | manticity.com |
Manti (/ˈmæntaɪ/ MAN-ty) is a city in and the county seat of Sanpete County, Utah, United States.[4] The population was 3,276 at the 2010 United States Census.
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What is the difference between liquidation, closing down, and declaring bankruptcy?https://t.co/m5ogffrKIY pic.twitter.com/wC8ooUp8uQ
— Jan Meriss Alfonso (@MerissJan) November 19, 2022
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