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All About Liquidation

Liquidation is when a full company or just a part of a company is closed down and the assets of the company as well as the property get reorganized. Liquidation might also mean dissolution, but sometimes dissolution means that it is the last stage of liquidation. There are mainly three different kinds of liquidation; these are compulsory, members voluntary and creditors’ voluntary liquidation. Compulsory is often referred to as a creditors’ liquidation where as the voluntary liquidations are also sometimes referred to as shareholders. It all depends on the situation of the company. Liquidation of a company can also be due to insolvency, where they have not paid their debts. When it comes to finance, liquidation might often be used when changing an asset into cash.

The people that are by law, told to sign an appeal regarding the liquidation of a company can be the official receiver, the security of the state, a creditor that establishes a prima facie or it could be the company itself.

Members’ Voluntary Liquidation

This is when the decision of liquidation is made by the shareholders of the company, and the assets will be enough to pay off all the company’s debts; in other words, the company is solvent.

Compulsory Liquidation

This is when the court has the company wound up on the petition of a suitable individual, but if there is more than one individual, they will all have to present the petition as only one director cannot present it on his own.

Creditors’ Voluntary Liquidation

This happens when the members of the company are the ones to decide that their company should be put into liquidation, but there are not enough assets to pay off the debt of the company, this means the company is insolvent.

Before considering liquidation, seek advice from a financial advisor, they will tell you what you should do and what options you have.

Written by Clark Amerson. Get more info on liquidation or find out more information on insolvency.

Source: www.articlecity.com