About Liquidation

> Consequences of liquidation

> How much does it cost?

> How long does it take?

> Process of liquidation

Consequences of entering into liquidation

  • A company (legal entity) can enter the liquidation process either on the basis of decision of court, owners or statutory body. .
  • If the company decides to enter the liquidation (accodring to article 68, par. 3, letter c) of the Business Code), it can be done in two ways:

    1. By decision of the statutary organ (general meeting which agrees with the abolition by 2/3 of votes)
    2. By decision of partners outwith the general meetingu (agreement of all partners).

    In case of both above-mentioned ways a public notary's deed has to be drawn up.

  • However, only in case of these two ways of decision on liquidation are partners able to cancel the liquidation process. If a court decides about the liquidation, partners cannot cancel the process later on.

  • After a company enters the liquidation process it is obliged to use a "v likvidaci" annex.

  • A liquidator is appointed by the statury body, if not appointed in other way (by a contract, treaty or by articles). If a liquidator is not appointed by the above-mentioned ways, liquidator is appointed by the court. Only a natural person can be a liquidator.

  • By appointing, a liquidator possesses a right to act on behalf of the legal entity, however, only to the extent of a goal to liquidate the legal entity, it means he/she can deal with state officials, courts, conclude and terminate contracts, act in commercial relations and so forth.

  • A liquidator is obliged to determine whether the company is not overindebted. In case it is, liquidator has to submit a proposal of entering for entering a bunkrupcty. Afterwards, a liquidator acts in line with the administrator of the bankruptcy.

  • A liquidation share is paid out as lately as all claims of creditors, costs on liquidation process and liquidator's renumeration are settled. The share on liquidation assets are paid according to the shares of partners in the company, unless otherwise stated in articles of the company.

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How much does it cost?

The price of the liquidation consists of several items of which the overwhelming majority depends on a size of the company, its assets, number of activities, employees, claims and liabilities and number of corporate documents. In general, the price is a sum of:

  • Liquidator's renumaration,
  • Other liquidators's costs (phone calls, travelling expenses, ...),
  • Public notary's compensation for the notarial record,
  • Fee stamps for changes in the Business Register,
  • Costs on an annoucements of entering the liquidation in the Business Bulletin,
  • Costs on classification, archiving and discard of corporate documents,
  • Accounting costs (elaboration of final accounts and book keeping),
  • Commisions to authorized experts for appraisal of movable assets and real estates (if exists),
  • Other costs (various fees to civil and local offices, postage, …).

Price of the liquidation is calculated on the basis of the size of your company. I will calculate it the price for you if you contact me and tell me further information about the company.

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How long does it take?

Length of the liquidation process is directly proportinal to the size of the liquidated company, however, the process cannot be shorter than four months (according to the actual regulations) because an advertisement in the Business Bulletin has to be published twice and there is a 90-day waiting period in which creditors can claim their credits. In other words, the length of the liquidation is four months and more.

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Process of Liquidation

A process of liquidation consists of a sequence of operations which logically coherent and stem from actual relevant regulation. Proces likvidace se skládá z posloupnosti činností, které navzájem logicky navazují, přičemž vychází z dotčených právních předpisů, které likvidaci upravují. General framework includes:

  • Decision of partners on entering the liquidation process (incl. a notarial record),
  • Appointment of a liquidator,
  • Updating the Business Register about entering the liqudiation process,
  • Protokolární převzetí firmy likvidátorem,
  • Elaborating of extraordinary final accounts,
  • Determination whether the compeny is not overindebted
  • Annoucing of entering the liquidation process in the Business Bulletin,
  • Drawing of liquidation programm,
  • A liquidation itself (encashment of liquidation assets, termination of contracts, laying off, classification of documents, communication with offices etc.),
  • Archiving of corporate documents,
  • Formation of a final report,
  • Distribution of liquidation assets among partners,
  • Elaborating of final accounts,
  • Deletion of company from the Business Register.

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