How to close a company with debts?

Sometimes the bravest decision isn't to insist, it's to close. Shutting down a company in debt feels like admitting defeat, but doing it the right way is what protects you, your family and the people who worked with you.

What to do now

1. Take inventory. With your accountant, list everything the company owes (federal, state and municipal taxes, INSS social security and FGTS severance fund contributions, banks, suppliers, rent) and everything it has to collect or sell (inventory, equipment, receivables from customers).
2. Understand who answers for what. In a limited liability company, the rule is that the company's assets answer for its debts, but there are exceptions: tax debts with irregularities, improper closure, a personal guarantee on a loan. For an MEI or a sole proprietor, the business assets are practically the same as the person's. Ask your accountant and lawyer which case is yours.
3. Don't leave the company "abandoned." A company with no activity and no formal closure keeps generating obligations and fines, and improper closure can lead to the partners being charged directly. Formal deregistration is the way, and it doesn't depend on paying everything off first: Complementary Law 123/2006 (art. 9) allows deregistration with outstanding tax, social security or labor debts, but partners and managers remain liable for them. Close it on paper; negotiate what's left.
4. Assess whether closing really is the way out. If the business is viable but suffocating, out-of-court or judicial reorganization (Law 11,101/2005) can give it breathing room. If it isn't viable, an orderly wind-down stops the bleeding.
5. Negotiate the debts that remain. Federal debts can be negotiated on the Regularize portal of the Office of the Attorney General of the National Treasury (PGFN), which offers discounted settlements in some cases. States and municipalities usually have their own installment programs.
6. Close with your team paid up, as far as possible. Severance pay, FGTS forms and the documents for unemployment insurance. Each person leaves with a life of their own to reorganize.
7. Document everything. Keep contracts, agreements and receipts. They will be your protection in the years ahead.

Sebrae (0800 570 0800) gives free guidance to small businesses, and the Public Defender's Office helps those who can't afford a lawyer.

When it happened to Bairo

Bairo knows the feeling of watching the ground disappear from under a business. He says he joined as an investing partner in a company that was not what it seemed, and that it did not hold. Before that, he had already lost his place in a brand he helped create, when his partners pushed him out of the business.

What his path shows is that the way you leave a business weighs as much as the way you came in. He carries each ending as a lesson, not as a secret: none of the falls was erased from the story. They were put to use.

The path

Closing responsibly is an act of respect, for yourself and for others. Closing one door properly is what lets you open the next with your head held high. Bairo calls the one that worked "the seventh attempt," and it only existed because the earlier ones had been lived through to the end.

There is also a gain few people notice: whoever closes a company with the accounts organized and the paperwork in order leaves with their reputation intact. Suppliers, former employees and customers remember who closed with respect, and they are often the ones who open the door to the next business. A clean name in the market is worth more than any inventory left on the shelf.

Read also

• My company went bankrupt: now what?
• How to open a business after going broke?
• The seventh attempt