To avoid bankruptcy, many companies all over the world are opting for business liquidation. With the help of liquidation, they can sell the assets of their company and then pay off their creditors.
At present, you will find that there are three main types of business liquidation- which are voluntary liquidation, creditors’ liquidation and compulsory liquidation.
Here is more information about all three types:
Voluntary liquidation – In this kind of liquidation, the shareholders, partners and members of the company decide to go for liquidation. Put simply, voluntary liquidation is a collective agreement to pay off debts.
Creditor’s voluntary liquidation – In this type of liquidation, the creditors and the partners agree to liquidate. The creditors of the company ask the partners to dissolve their business which will help them to pay off debts.
Compulsory liquidation – Compulsory liquidation is ordered by the court. In this process, the company is handed over to the creditors. After this, all of the transactions relating to the company are stopped.
If you own a company that has too much debt, it is always recommended to opt for liquidation rather bankruptcy.