What is the liquidation of the company? If you are looking for a simple definition, it’s a process in which a business goes through the dissolution. The company’s assets are sold and payments are made to creditors. In most cases, if a company makes profits, it will not go into this process. However, in some cases, even solvent companies must choose this path. Do not know more.
There are two main types of liquidation of the company. The first type is called voluntary liquidation when this decision is taken by the shareholders or the administrators and the dissolution is made. If the members of the Board decide to make this choice, they must have most votes before proceeding. In the same way, if the shareholders want to go in this direction, they must all do it before taking action.
Here, it is important to keep in mind that the voluntary liquidation of the company can be CVL or MVL if the company is insolvent. Voluntary liquidation members are carried out in such a way as to terminate the Company in an orderly manner. In other words, it can be started if the shareholders of the company feel that the directors do not take action against their interests. For example, company products or services may not attract potential customers for certain reasons. In fact, VL is the best solution with respect to the second type of liquidation. In this type, the Court is not involved and the question is resolved outside the Court. Creditors are fully reimbursed by selling the assets of society.
Another type is called mandatory liquidation in which the process is launched by creditors. The reason may be that society does not leave the creditors. What happens is that creditors receive a court order to dissolve society. The cost of the courts was born by creditors. However, once the process is over, they are the first part that is paid. So the extra cost is worth it.
The creditors who want the liquidation of the company to go to court to obtain the assets of the business sold. This happens when creditors believe that the directors of the Company are not cooperative with respect to pay debts. In most cases, the company is not obliged to liquidate the directors who extinguish debts because of the fear of losing society.
This is another type in which the goal is to preserve the assets of the company that can be at risk. To this end, a good liquidator is appointed to protect the financial situation of the company. On the other hand, the liquidation request is taken into account by the Court.