In reality, liquidation and cancellation is a method that enterprises can only think of to cut down debts when they fall into business crisis, such as insolvency. Actually, the law stipulates that the liquidation team in the liquidation process found it insolvent, they should apply for bankruptcy to the court. Article 187 of the Company Law stipulates that if the liquidation team finds that the company's assets are insufficient to pay off debts after cleaning up the company's assets and preparing the balance sheet and the list of assets, it shall apply to the people's court for bankruptcy declaration according to law.

In practice, enterprises with bankruptcy reasons during the process of self-liquidation all intend to avoid entering the bankruptcy procedure for a variety of reasons, so as to take the initiatives or are passive to conceal account books, deliberately notify creditors, destroy business information and other means of false cancellation. However, such cancellation because of the liquidation team’s obvious fault will lead to the enterprise independent personality denial, even the liquidation team’s jointly and severally assuming the consequences of the debts of the enterprise rather than to clear the debt, what's more, the illegal liquidation may lead to a huge tax risk, and even criminal responsibility risk. Article 162 of the Criminal Law defines the crime of disrupting of liquidation: companies or enterprise hide property, make false account on the balance sheet or schedule of assets, or before clearing the outstanding debt distribution thus result in serious damage to the interests of the creditors or others during liquidation, the person in charge with direct responsibility and other directly responsible persons shall be sentenced to fixed-term imprisonment of not more than five years or criminal detention, and concurrently or independently be sentenced to a imposed a fine of not more than twenty thousand yuan and two hundred thousand yuan.

Therefore, when an enterprise encounters a crisis and considers to terminate, if insolvency is found in the investigation or liquidation of the enterprise, it is suggested not to blindly enter the liquidation procedure first, but to seek the guidance and help from professionals in time, so as to make a solution on the premise of avoiding risks.

In fact, the bankruptcy of enterprises is not so terrible and unbearable, the essence of bankruptcy rules is to maximize the balance of the interests of creditors through external forces, give consideration to the situation of debtors, "save" the enterprise rather than "destroy" the enterprise. There are two most important procedures designed to give the debtor a chance: reconciliation and reorganization.

In general, after filing for bankruptcy, the debtor will be given time and opportunities to reorganize or reconcile, while for the creditors, insolvency means that debts of creditors probably could not be paid fully. If the enterprise market opportunity exists, especially as the outbreak causes difficult, creditors will usually consider offer certain debtor reforming time, so as to achieve win-win results.

The debtor-led restructuring plan is seen as a top priority, as it concerns whether it can be approved at the creditors' meeting and whether it will go further into bankruptcy liquidation and cancellation. And crucially, after entering bankruptcy, sealed up and frozen seized enterprise property shall be immediately unfreeze and ongoing implementation and financing interest shall stop, outstanding debt is due immediately, etc. As far as total assets of enterprises will list together, this will no doubt save the business operators from struggling to cope with the difficulties and trouble for the time being.

From many bankruptcy cases, the most of the bankrupt enterprise are most troubled for the blind expansion lead to capital chain rupture, financing with low efficiency and high cost, diversity crisis as well as illegal compliance to operating risk, etc. Such enterprises temporarily are short of blood, but have the core competitiveness, and their business model have growing market.

If you intend to close an enterprise, according to the number of opportunities and the degree of initiatives, the order is: self-reorganization, self-liquidation, forced liquidation, bankruptcy reorganization, bankruptcy liquidation.

After the epidemic, there will be a large probability of concentrated labor disputes, commercial contract disputes, and shareholder disputes, enterprises will face a period of time of major litigation risks, so they shall prepare for a rainy day, it it time for various enterprises to sort out the business, weigh their own situation, and do early planning. Though comprehensive analysis, enterprise restructuring is the most initiative, has the most opportunities, with the least cost and having the highest success rate.

Enterprises can combine enterprise resources on the basis of comprehensively mastering the operation status and eliminating operation risk points;Through sorting out business panels, protect core resources, increase the debt settlement chips to reduce the debt risk, optimize the business model, change of employment structure to reduce the labor costs, adjust operational architecture to enhance enterprise operation capability and cohesive force. Thoroughly self-liquidation, bankruptcy reorganization and reconciliation to solve the debts problems, cut the enterprise operating burden, and through a series of restructuring measures, it can also use a more effective financing ways to go into the fast development lane.

How enterprises choose to face the crisis and what they plan to do will become the watershed of later development.

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