FALCO

Liquidating a closing business in Tennessee

Closing a business is a sequence, not a single event. People get notice and get paid, lenders get dealt with, taxes get cleared, assets get sold, and only then does the company itself go away. Here is that sequence for Tennessee, with the laws that set each step, and how to turn the equipment, fleet, inventory and building into the most money.

Short answer

Close in order: give any required layoff notices and pay final wages on time, find out which lenders have liens on which assets, clear the sales tax, sell the assets, then dissolve the company. Federal WARN generally applies at 100 or more employees and requires 60 days' notice; Tennessee's own law covers employers with 50 to 99.

Licensed Tennessee auctioneerUpdated November 2026

The order that keeps you out of trouble

  1. People. Layoff notices if they apply, and final paychecks on time.
  2. Lenders and liens. Find out who has a claim on which assets before you sell any of them.
  3. Taxes. Final returns and the clearance a buyer or the state will ask for.
  4. Assets. Sell what you own, return what you lease, and keep a record of every sale.
  5. The entity. Dissolve or terminate the company with the Secretary of State.
If the business cannot pay its debts, talk to a business or bankruptcy attorney before you sell anything. Selling assets while insolvent can raise questions later about who should have been paid. Our bankruptcy and receivership guide explains how court-supervised sales work.

Layoff notices: federal WARN and Tennessee's law

Federal WARN Act
The federal WARN Act generally covers employers with 100 or more employees, not counting part-time employees.[1] A covered employer must give 60 days' written notice before a plant closing or mass layoff.[2] A plant closing generally means a shutdown that causes 50 or more employees at a single site to lose their jobs within 30 days.[1] Notice goes to each affected employee (or their union), the state's dislocated worker unit, and the chief elected official of the local government.[3]
Selling the business instead of closing it
When a business is sold, the seller is responsible for WARN notice for layoffs up to the date of the sale, and the buyer after that.[1]
Tennessee's plant closing law
Tennessee has its own law for employers with 50 to 99 full-time employees at a Tennessee workplace. When it applies, the employer notifies the Commissioner of Labor and Workforce Development at the same time it notifies employees of the closing or reduction.[4] Notices are filed with the department's Dislocated Worker Unit.[5]
Final paychecks
Employees who quit or are let go must be paid in full by the next regular payday or 21 days after separation, whichever is later.[6]

Lenders, liens and leased equipment

Before selling anything, find out who has a claim on it. Lenders and equipment finance companies usually record their interest by filing a UCC financing statement with the Tennessee Secretary of State, which you can search.[11] Pull the filings against your company's name, match them to your loans, and note which assets each one covers. Leased equipment belongs to the leasing company, not to you, and goes back to them rather than to auction.

Most lenders would rather be paid from an orderly sale than repossess a truck and sell it themselves. Agreeing up front on which assets are sold, through whom, and how the lien is released at closing usually gets the lender paid and leaves more for the owners.

If the lender sells the collateral itself
When a secured lender sells collateral after a default, Tennessee law requires every aspect of the sale to be commercially reasonable, and the sale can be public or private.[7] The lender must send notice to the debtor, any guarantor and, for business collateral, other secured parties of record.[8] For business collateral, notice sent at least 10 days before the sale is treated as timely.[9] If the sale brings more than the debt, the surplus goes to the debtor; if it brings less, the debtor generally owes the rest.[10]

That last point is the reason a well-marketed auction matters even when you owe the bank. Every extra dollar a piece of equipment brings either lowers what you still owe or comes back to you.

Sales tax, the final return and tax clearance

When a business sells out
Tennessee requires a business that sells out or quits to file its final sales tax return within 15 days. The buyer of the business or its stock of goods must hold back enough of the purchase price to cover unpaid sales tax until the seller produces a receipt or certificate from the Department of Revenue showing the taxes are paid. A buyer who skips that step can become personally liable, up to what it paid.[12] The Department of Revenue explains how to close your tax accounts.[13]
Is the liquidation sale taxable?
It depends on what is sold. The Department of Revenue has ruled that a one-time sale of used business equipment by a business that does not regularly sell equipment can be an exempt occasional and isolated sale, while inventory held for resale and vehicles, boats and aircraft that must be registered are treated differently.[14] Letter rulings apply only to the business that asked, so have your CPA confirm how your sale will be treated.

Selling the assets

A closing business usually has several different kinds of assets, and each sells best to a different crowd:

  • Equipment and tools. Contractors, shops and dealers often buy nationally and bid online, so the right auction reaches far beyond your town.
  • Vehicles and fleet. Titles, odometer statements and lien releases need to be ready. See selling vehicles, equipment, boats and aircraft.
  • Inventory. Sometimes best sold in bulk lots to other businesses in the same trade, sometimes item by item. It depends on what it is.
  • Real estate. If the business owns its building or land, that sale is run by a licensed real estate firm. In Tennessee, conducting an auction of real property requires both an auctioneer license and a real estate broker or affiliate broker license.[18]
Selling everything to one buyer who offers to "take it all" is fast, but that buyer is pricing in their own resale margin. Putting each kind of asset in front of the buyers who want it, on a firm date, is usually how a closing business recovers the most.

Keep a record of what each asset sold for. Your CPA, your lender, your partners and possibly a court will all want to see it.

Closing the company itself

Once the assets are sold and the debts are dealt with, the entity is formally closed with the Tennessee Secretary of State:

LLCs
An LLC files a notice of dissolution, winds up its affairs, and then files articles of termination.[15] The Secretary of State will not accept articles of termination without a tax clearance from the Department of Revenue.[16]
Corporations
A corporation files articles of dissolution, which take effect when filed. After that, the corporation continues only to wind up its business.[17]

What FALCO does, and what it costs

We walk through what the business owns and owes, tell you plainly what is worth auctioning, and route each group of assets to the licensed Tennessee firm whose buyers want it. You see the plan in writing before anyone signs.

No cost to you. The buyer pays a 10% premium on top of the winning bid, and FALCO is paid from that premium. FALCO does not buy or take possession of anything.

Questions

Common questions

Does the WARN Act apply to my Tennessee business?

The federal WARN Act generally applies to employers with 100 or more employees, not counting part-time employees. It requires 60 days' written notice before a plant closing or mass layoff. Tennessee has its own plant closing law for employers with 50 to 99 full-time employees at a Tennessee workplace, which requires notice to the Commissioner of Labor at the same time employees are notified.

When is a final paycheck due in Tennessee?

Under Tennessee law, an employee who quits or is discharged must be paid in full no later than the next regular payday or 21 days after separation, whichever is later.

Can I sell business equipment that a bank has a lien on?

Yes, but the lender has to be paid or agree to release its lien, which is normally done from the sale proceeds. Check the Tennessee Secretary of State's UCC records to see which lenders have filed against your equipment, and talk to them before the sale. A sale the lender has agreed to usually goes better for everyone than a repossession.

What happens with sales tax when a Tennessee business sells its assets?

Under Tennessee law, a business that sells out must file a final sales tax return within 15 days, and the buyer must hold back enough of the price to cover any unpaid sales tax until the seller shows a receipt or certificate from the Department of Revenue. A buyer who does not can become personally liable. Whether the liquidation sale itself is taxable depends on what is sold, so ask your CPA.

How do I dissolve an LLC in Tennessee?

An LLC files a notice of dissolution with the Secretary of State, winds up its affairs, and then files articles of termination. The Secretary of State will not accept the articles of termination without a tax clearance from the Department of Revenue. A corporation files articles of dissolution, and then exists only to wind up its business.

What does it cost to use FALCO to liquidate a business?

No cost to you. The buyer pays a 10% premium on top of the winning bid, and FALCO is paid from that premium. FALCO does not buy or take possession of anything. Licensed Tennessee auction firms run every sale, and a licensed real estate firm handles any real estate.

Sources

  1. [1]29 U.S.C. § 2101 (WARN Act definitions: employer, plant closing, mass layoff)
  2. [2]29 U.S.C. § 2102 (WARN Act: 60 days' notice)
  3. [3]20 C.F.R. § 639.6 (who must receive WARN notice)
  4. [4]Tennessee Department of Labor and Workforce Development, WARN Technical Assistance Guide (Tenn. Code Ann. §§ 50-1-601 to -604)
  5. [5]Tennessee Department of Labor and Workforce Development, WARN Notices
  6. [6]Tennessee Department of Labor and Workforce Development, Wages and Breaks (Tenn. Code Ann. § 50-2-103)
  7. [7]Tenn. Code Ann. § 47-9-610 (disposition of collateral after default)
  8. [8]Tenn. Code Ann. § 47-9-611 (notification before disposition)
  9. [9]Tenn. Code Ann. § 47-9-612 (timeliness of notification)
  10. [10]Tenn. Code Ann. § 47-9-615 (application of proceeds; surplus and deficiency)
  11. [11]Tennessee Secretary of State, UCC search
  12. [12]Tenn. Code Ann. § 67-6-513 (sale of a business: final return; buyer withholding)
  13. [13]Tennessee Department of Revenue, Close Your Business
  14. [14]Tennessee Department of Revenue, Letter Ruling 00-47 (occasional and isolated sales of business equipment)
  15. [15]Tenn. Code Ann. § 48-249-609 (LLC notice of dissolution)
  16. [16]Tenn. Code Ann. § 48-249-612 (LLC articles of termination; tax clearance)
  17. [17]Tenn. Code Ann. § 48-24-103 (corporation articles of dissolution)
  18. [18]Tenn. Code Ann. § 62-19-102 (auctions of real property require auctioneer and broker licenses)

Keep reading

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This page is general information about Tennessee and federal law, not legal, tax, or financial advice, and not a promise about any outcome. Laws change and every situation is different. For advice about your circumstances, consult a licensed Tennessee attorney, CPA, or other licensed professional. FALCO is not a law firm, a government agency, or a court, and is not affiliated with any of them. FALCO does not buy, list, broker, or sell anything itself. Licensed Tennessee auction firms, and licensed real estate firms where real estate is involved, run every sale.