Alternative Liquidation of a Troubled Company

A client from a small town in the Vinnytsia region, the owner of a restaurant hit by a string of bad luck, recently sought our help. The restaurant had been struggling due to a scathing social media post by a disgruntled customer, and to make matters worse, it had been slapped with fines from a tax inspection that the client contested. The client turned to our firm for legal assistance to handle these issues as smoothly as possible.

The case was handled by a team including a tax law expert and a litigation attorney who aimed to file a defamation lawsuit to protect the client's damaged reputation. However, it became clear that while the tax issues could be resolved, restoring the restaurant's reputation in a small community was not merely a legal battle. Winning the lawsuit would not change the already settled opinions of many potential customers.

Consequently, the client decided it was best to start afresh and say goodbye to the current business. We facilitated this through an alternative liquidation of the LLC. This article will explore the advantages of this method of winding down a business and illustrate how our lawyers assist clients in resolving complex legal issues.

You may also like: Alternative LLC Liquidation: Exiting a Company Without Dissolving the Legal Entity

Quick Business Exit: Benefits of Alternative LLC Liquidation

What were the advantages of such a decision—alternative liquidation of the company? There are several, in this specific case:

• It is less expensive than litigation. Arguing in court, particularly against dishonest patrons, is costly if one hires highly qualified lawyers. It is also emotionally draining, as it is difficult to remain detached from the process. Therefore, the client opted to start over without having to prove anything to anyone.
• It is quicker than enduring lengthy court proceedings. Obviously, it is faster than initiating the traditional process of legal entity dissolution (classic liquidation), which can take years.
• It provides an opportunity for stakeholders to exit the process, even if the tax authority has already levied debts. LLC members are not actually responsible for the company’s actions, so they can leave at any time (provided that the Registry of Enterprises has not recorded the commencement of the legal entity’s dissolution). More information on exiting an LLC with outstanding debts can be found here: Can you sell a company with debts? 

Our team fully facilitated and managed this process. How did we do it? We successfully located reliable buyers who were interested in the business and unfazed by its current challenges, given their expertise in professional rebranding. Considering our lawyers had initiated a challenge to tax assessments, the new buyer took an active role in the ongoing legal case. We prepared all necessary documentation, coordinated the signing of the agreement with a notary, and managed the registration of changes in the national registry. Consequently, our client was able to exit the company quickly and with minimal distress, a company that had turned from a thriving enterprise into a liability.

If you find yourself in a similar situation, our legal firm is ready to assist. We understand the importance of a seamless exit from a business that no longer meets your needs. Our LLC liquidation services in Ukraine are designed to be quick, effective, and stress-free. Here’s what we offer:

1. Personalized Approach: We analyze your specific circumstances to offer the most suitable option for LLC liquidation in Kyiv and other Ukrainian cities.
2. Risk Minimization: We help mitigate potential negative impacts on the company’s founders and management, not only during the closure process but also thereafter.
3. Comprehensive Range of Services: We provide a complete suite of services related to the liquidation of a legal entity, including the setup of a liquidation committee, asset inventory, liquidation balance preparation, and more.
4. Tax Support: We offer guidance during tax inspections, ensuring all processes are completed up to and including obtaining certificates of no debt and deregistration.
5. Buyer Sourcing: If selling the business, we assist in finding dependable and honest buyers who will value your business appropriately.

Don’t postpone this critical decision. Reach out to us, and we will ensure you can divest from your business swiftly and safely.