What is the Company Liquidation Process and Procedure?

We all are familiar f the fact that liquidation of the company is kind of painful. It is not just painful and stressful for the directors of the company but also for the creditors of the company. To relieve the stress to some extent, people get the help of business rescue.

There is no single answer to the question regarding the liquidation procedure of a company. there are so many aspects that are to be kept in mind regarding liquidation and only then we can proceed with the process of liquidation. If the liquidation is voluntary, the scenario will be different and if it is involuntary, things will be dealt with in a different manner.

Company Liquidation Process (compulsory liquidation)

People need to have a basic understanding of the liquidation and its types so that if they go through such situations, they keep calm and carry out the stuff in a proper way.

There are basically two main types of liquidation which are;

• Compulsory Liquidation

• Members Voluntary Liquidation

• Creditors Voluntary Liquidation

Compulsory Liquidation –when the company is unable to pay its debts, the creditors ask the court to liquidate the company. this is also carried out when the company has gone to a point where it has become impossible for it to reverse itself.

Members Voluntary Liquidation – If the company is able to pay its pending debt, the court is not involved. A Members Voluntary Liquidation (MVL) can be hired in such a situation.

Creditors Voluntary Liquidation –this is initiated by the directors as the company is unable to pay its pending debts. A CVL is hired before the court is asked to commence the liquidation of the company.

When the liquidation for a company becomes the only solution, the matter is taken to the court this is because the company is unable to pay its debts and that is why the company asks the court to liquidate itself. People need to be very careful regarding the laws in such situations because I anything is not happening according to the laws and regulations, it will be considered as a violation.

Meeting between directors and shareholders

A meeting is held between the directors and the shareholders regarding the liquidation.

voluntary winding up petition

• the involuntary wind-up petition, the directors meet up so that they may pass a resolution regarding the company’s liquidation.
• After they agree on the resolution, the advert gets placed in the Gazette. the time frame for the Gazette to be placed in 14 days.
• Note that all the creditors are to be notified regarding the meeting 7 days before the meeting date.
• In the meeting, a Statement of affairs is presented
• Resolution of winding up the company is passed
• A director is chosen so that he may represent the whole group at the meeting of creditors and officiate

Liquidation can be soothing complex and stressful for the people. taking the external help in such a condition is a better option to lessen the burden of worries from you.