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Information Regarding Liquidation

If you are involved in a liquidation process then there are several things that you should know. Many people find themselves unwittingly involved in a liquidation process, because they own stock in or are are owed money by a company that has began the process of liquidation. The first step in a liquidation process is the company ceases all business transactions and the actual controls of the company are handed over to a "receiver" or group of receivers.

The receivers job is to first notify all holders of outstanding debt and all share holders of the company that it is going through liquidation. Then the receiver can begin the process of taking inventory of the companies assets and determining the best way to convert them into ready cash to pay off the debts that are owed by the company.

There are three types of liquidation and they are commonly referred to as members voluntary, creditors voluntary and compulsory liquidation. With members voluntary, the share holders or partners voluntarily agreed to liquidate assets and the value of the assets equals or exceeds the value of the outstanding debt that is owed.

Creditors vouluntary is also agreed upon by the share holders but the difference is that with creditors voulunary the value of the assets is less then the total amount of debt that is owed. With compulsory liquidation the process is ordered by a court and the share holders have no say in it.

Because a company is going through liquidation does not mean that it is out of business for good and in fact many companies emerge from the process of liquidation and then prosper having been freed of the burden of outstanding debt. There are many reasons that a company can go through liquidation but with the economy now in slump more and more of them now are.

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

Source: www.articletrader.com