Can I Keep Inventory That Doesn't Sell When I Close My Business?

When you go out of business, you may sell your inventory. The money you receive from the sale will help you repay your creditors and take away as much value from the business as possible. However, if some of the inventory doesn't sell, you must decide what to do with it. Depending on the circumstances, you may be able to keep it for yourself or use it to open a new business.

Inventory Liquidation

  1. Businesses that use liquidation as an exit strategy typically sell their inventory in going-out-of-business sales to the public. They may also sell a portion of their inventory or assets at a public auction. Regardless of what sales methods you use, you must distribute the proceeds from the sale to business owners based on their stakes in the business. For example, if each stakeholder in the business owns 20 percent, then each stakeholder must receive 20 percent of the proceeds from the liquidation sale.

Regulations on Remaining Property

  1. The property that remains after a business's final liquidation sale still belongs to all owners of the business. If you cannot sell it, you must distribute it to all owners of the business according to their percentages of ownership. For example, if one partner owns 40 percent of the business and two other partners each own 30 percent, the first partner must receive 40 percent of the assets and the other two partners must each receive 30 percent.


  1. If a business files Chapter 7 bankruptcy, it must liquidate its assets to pay its creditors. In Chapter 7 bankruptcy cases, a business can exempt a portion of its assets from liquidation. These assets remain the property of the business owners, and the business owners must divide them according to their relative stakes in the business. However, business owners can only keep their non-exempt assets, which may include inventory, if the business has paid all of its secured and unsecured debts.


  1. Though the law does not require non-bankrupt business owners to sell their business's assets when the business closes, many business owners try to sell them anyway to recover as much money from the business as possible. If a non-bankrupt business owner is a sole proprietor, he and the business are the same legal entity, so he can keep whatever inventory or assets he doesn't wish to sell. However, sole proprietors are still responsible for repaying the business's creditors.