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Some Smart Facts About Liquidation

Many people have heard about liquidation and never really quite understood its true meaning until they became involved in the process. Liquidation is the process by which personal or company assets are converted to actual money for the purpose of paying down or paying off outstanding debts that are owed.

There are three common forms or types of liquidation and they are as follows. The first one is known as "members voluntary liquidation" and with this type of liquidation the actual share holders or partners in a company have unanimously agreed to liquidate company assets to pay off outstanding debt and the total debt is less then the total value of the assets to be liquidated.

The next type of liquidation process is refffered to as "creditors voluntary liquidation" and it is the same as members voluntary liquidation in that it was unanimously agreed upon by share holders or partners with the exception of the fact that with this type of liquidation process the total value of the assets to be liquidated does not equal or exceed the value of the outstanding debt to be settled.

There is a third type of liquidation process and it is referred to as compulsory liquidation and with this type of liquidation it has been ordered by a court to settle outstanding debts.

With any of these three liquidation processes the fist thing the takes place is that all company business is halted and the controls of the company are handed over to a "receiver" or receivers who then notify all holders of oustanding debts and share holders that the company is proceeding with a liquidation process. There are several reasons for a company to go through liquidation and it doesn't nesesarily mean that a company is out of business for good.

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

Source: www.articlesphere.com