Project liquidation is another result and method of project closure. Due to various reasons, the project is terminated before the final deliverable owner is obtained, and project liquidation is required. Project handover is a normal project termination process, and project liquidation is an abnormal project termination process. The subject of project liquidation, that is, the convener of the project liquidation, is the project owner. Project liquidation is mainly based on contracts.
1. Basis and conditions for project liquidation, including but not limited to
(1) Project decision-making errors.
(2) Technical direction errors occurred in the design of the project planning stage.
(3) Serious problems exist in the project construction plan.
(3) A major quality accident occurred during the implementation of the project, and the continued operation of the project will cause the economic or social value foundation to cease to exist.
(4) Although the project was successfully handed over, it was discovered during the trial operation that the technical performance indicators or economic efficiency indicators of the project could not meet the goals of the construction plan, and the economic or social value of the project could not be realized.
(5) The project has "unfinished projects" because the funds cannot be in place in the near future and the specific time limit that may be in place cannot be determined.
2. Procedure
For projects that are liquidated midway or near the end of the project, the project owner should set up a project liquidation working group jointly participated by all parties in accordance with the relevant clauses in the contract to carry out responsibility confirmation, loss estimation, and claim plan formulation in accordance with contract conditions After negotiation, the project liquidation report is formed after the negotiation is successful, and the joint visa of the supplier and the demander of each contract becomes effective; if the negotiation fails, arbitration will be initiated according to the contract or directly filed with the people’s court where the project is located.
3. Project liquidation method
According to the different organizers of the project liquidation, the project liquidation methods can be divided into:
1. Investors organize liquidation by themselves. This is the method adopted by most small and medium project companies. Since most project companies use family member registration, the liquidation of many project companies does not need to be done externally.
2. Joint liquidation with the project partner. When an external partner is involved in a failed project, a formal company liquidation procedure is generally required.
(1) Steps and strategies for investors to organize liquidation
The core work of the investor’s own organization of liquidation is to write off the company’s business registration procedures. The specific steps include:
Inventory of company assets and debts;
Handle the cancellation procedures of national tax and land tax (audit is required if necessary);
Handle cancellation procedures of bank accounts;
Handle the cancellation procedures of industrial and commercial registration (an announcement is required if necessary);
Handle the cancellation procedures of the legal person code certificate.
(2) Steps and strategies for liquidation between investors and partners
The steps of liquidation with the partner are mostly the same as the steps of the investor’s own organization of liquidation. As a third party is involved, the procedure is slightly more complicated. The specific difference lies in the openness, fairness and fairness of the cleanup process:
It is necessary for both parties to cooperate to form a liquidation organization (or liquidation team);
Need to develop a liquidation plan;
Need to have the assistance of accounting firms and other intermediary agencies.
4. The role of project liquidation
The role of project liquidation is:
1) Lock in investment losses;
2) Releasing the obligation relationship with other project partners to avoid potential legal disputes:
3) Clean up the debt relationship with creditors and avoid potential debt disputes:
4) Settle the tax relationship with the tax department to avoid potential tax legal liabilities;
5) Termination of obligations such as periodic accounting and tax reporting;
6) If you are insolvent, you can apply for bankruptcy protection;
7) The project construction period is too long, there is no deadline, and the project is finally closed;
8) Lay the foundation for the operation of the new project.