Company owners who want to successfully dissolve their business often opt for company liquidation. The main reason for this is that the procedure allows them to not only end their business properly, but also obtain a lump sum from any remaining assets. Although companies do not liquidate if their finances are healthy, some solvent companies choose to do so under certain circumstances.
The most common type of company liquidation
Although there are different kinds of liquidation, compulsory company liquidation is the most common. This is because most companies opt for liquidation when their finances and business is suffering. Compulsory liquidation is usually initiated by creditors when outstanding debts haven’t been paid. This procedure generally takes place if a company does not respond to an order to repay the creditors. A court order from these creditors then demands that the company is dissolved.
Once this is done, the operation and assets of the company are taken out of the hands of the owner and management, and put into the hands of a court appointed liquidator. However, most companies opt for company liquidation before the situation becomes a court matter.
Hiring professional liquidators to oversee the procedure of company liquidation is usually the best option, as owners don’t have to worry about dealing with court orders. In addition to this, the liquidators are appointed by the company, which further ensures that the liquidation will be in the company’s favour.