Understanding Liquidating Trustee in the Business Liquidation Process
A liquidating trustee is the person appointed to handle the funds resulting from a business liquidation, manage payment of debts, and more.
What is a Liquidating Trustee?
When a business chooses to liquidate, someone must be appointed to manage the financial side of the process. As a full-service business liquidation firm serving the state of Florida, The Turning Group specializes in liquidating trustee to conclude the liquidation process and finalize the sale of a company’s assets.
Liquidating Trust Overview
At The Turning Group, a liquidating trust is an important piece of our business windup and liquidation process. If a chapter 11 bankruptcy or a bankruptcy-alternative windup ends in liquidation, a liquidation trust is formed to increase value and disperse to lenders the revenue of divested assets of the previously distressed and now liquidated business entity.
What Is a Liquidating Trust?
A liquidating trust is a new legal entity formed to become the successor to the liquidating entity. The assets and liabilities of the business entity are moved into the trust and the previous owners of the liquidating entity become unitholders or recipients of the trust.
Liquidating Trust Agreement
When liquidating trusts are established, they are usually accompanied by a liquidating trust agreement. Often one of the first steps in our business liquidation process, this agreement is composed to govern the operations of the trust and is carried out between the previous entity and the trustees before the business is liquidated. Such an agreement should outline trustee duties and governance in addition to distributions and other administrative matters.
The Role of a Trustee in Liquidating a Trust
As the trust’s administrator, the role of the trustee in liquidating a trust is to manage the liquidating trust by liquidating assets, paying lenders, solving any claims, and dispersing any available funds to the beneficiaries of the trust.
Liquidation of Trust Process
The liquidation of trust process begins after a liquidating trust agreement has been completed and the trustee is appointed. From here, it is the trustee’s job to handle all aspects of the liquidation process.
When you work with The Turning Group, this begins with the creation of a detailed inventory of the business’ assets followed by a valuation of the assets. The trustee uses this information to determine the total liquidation value by working with appraisers and auctioneers. The assets are then sold using the methods most appropriate for the situation.
Liquidating Trustee Remnants
Once the liquidation process is complete, the trustee will then begin to distribute the funds to any creditors. If the business’ debt is all paid off after the liquidation, any remaining funds will be distributed back to the company. With this money, the business owners can choose to either continue operating or soften the financial blow of closing their business for good.
As noted, making use of a liquidating trustee may be an effective way to execute the liquidation process. However, it’s always best to seek advice from a liquidation expert prior to initiating a liquidating trust to make sure that this type of entity makes sense for the situation. At The Turning Group, we specialize in all areas of the liquidation process, including business windup, mergers, asset maximization, and liquidating trustee to manufacture innovative solutions to our clients’ needs. Contact us today to learn more about how we can assist you.
If your business is facing bankruptcy proceedings, The Turning Group can help you find a solution to keep you on your feet. Based in Doral, Florida in the Greater Miami Area, we offer comprehensive bankruptcy alternative and liquidation services to clients throughout the state of Florida. Contact us today at 305-640-5754 or fill out the form below so we can begin to steer you toward success.