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Brief Facts Regarding Liquidation

Due to the recent decline of the U.S. economy more and more companies that were once profitable are using a liquidation process to pay off their outstanding debts. For this reason many people have found themselves having to deal with this, because they are either owed money by the company or are a share holder or partner in the company that is going through financial difficulties.

The first thing that happens when a company goes into liquidation is that all business is stopped and the actual controls of the company are turned over to one or more receivers who´s job it is to oversee the process. The first task of the receiver is to notify all parties envolved, whether they are share holders or debt holders that the company is in the process of liquidation.

The shareholder will then begin the task of taking inventory of company assets and determining how they are going to be converted into liquid capital to pay off the companies outstanding debts. There are three types of liquidation processes and they include "members voluntary", "creditors voluntary" and "compulsory" liquidation.

With the first one, or members voluntary, the share holders of the company unanimously agreed on the liquidation process and the amount of the assets is equal to, or exceeds the amount of the debt that is owed by the company. With the second type, or creditors voluntary liquidation, the share holders unanimously agree but the amount of the debt exceeds tha value of the companies assets.

The third type of liquidation, or compulsory liquidation is ordered by a court, is mandatory and the share holders have no say in it at all. If you have found yourself envolved in a liquidation process you should learn all that you can about liquidation, so you can protect yourself.

Written by Anthony Millman. Find the latest information on liquidation as well as liquidation Advice

Source: www.articlecity.com