Liquidation value vs. going-concern value

Liquidation value is the proceeds an administrator achieves by realising the debtor's assets individually — machinery to dealers, inventory to close-out buyers, real estate sold separately. Going-concern value, by contrast, is the price a buyer pays for the business as a living, functioning unit — including customer relationships, a trained workforce and ongoing contracts.

The administrator is statutorily required to realise the higher of the two values in creditors' interest (§ 1 InsO). In most cases with a viable core, going-concern value clearly exceeds liquidation value — going-concern sales are therefore the norm whenever a serious buyer shows up in time, before the report meeting.

For buyers, the gap between the two values is the real negotiating room: an offer noticeably above the estimated liquidation value is hard for the administrator to turn down, even if it stays below a healthy market multiple — because their statutory alternative isn't the market price, it's piecemeal liquidation.