If you face a possible foreclosure of your business property, you may explore available options to raise cash. Some businesses can avoid foreclosure by selling off some of their assets to meet their mortgage payments. As you explore this option, keep in mind that trying to sell your business assets may not happen easily and there could be some pitfalls in doing so.
Some businesses liquidate all of their assets in an effort to avoid foreclosure. If you just want to liquidate some of your assets, you should be careful not to sell something essential to your business operations. Chron explains some other issues you may run into while selling off assets.
Speed of sales
Not every kind of asset will sell quickly. Some assets that you can sell in a timely manner only go for a small price. You may have to choose between speedy sales and selling for a larger amount of money. Still, you might rapidly sell some valuable assets, like stocks and bonds, because an open market is available for them.
You may need more time if you want to auction off assets. Auctioning usually involves valuing your assets, setting up a bid price, filling out a description, photographing the assets, and contacting an auction house to auction your assets. An internet auction, however, may take less time to accomplish.
Also be cautious about possible liabilities you may incur on your sales. Generally, when assets sell for a greater amount than their book value, the government considers it a gain to you, and the government can tax a gain. Also, if you want to sell an asset with a lien on it, you have to settle the lien first. If you wish to sell assets that you have put up as loan collateral, you must pay the loan off or you cannot transfer ownership of your assets.
Going out of business sale
In the event you decide to liquidate all of your business assets to save your property, you may conduct a going out of business sale. However, these sales may pose problems. Some people look upon these sales with suspicion because some retail stores have put on these kinds of sales seemingly on a yearly basis. Some states have restrictions on a going out of business sale, so checking out state and local laws before you conduct your own going out of business sale may benefit you.