Liquidating a business is a relatively simple process provided that you take the right steps. Below is the process that most businesses follow when going through liquidation.
1) A liquidator: The first step in liquidation is the appointment of a liquidator. Usually it is company decision that is passed by the share holders of the company. Where the share holders pass the resolution, it is called voluntary liquidation. Compulsory liquidation is characterised by an order that orders a company to liquidate.
2) Collection of assets: The appointed liquidator collects all the assets of the company. These assets will include uncalled capital. Uncalled capital is the amount that is unpaid on shares. After the collation of assets, the creditors of the company are paid out in order of priority.
3) Surplus funds: After paying back creditors, there may be surplus funds left over. These funds are commonly given back to the share holders of the company.
4) Dissolution: After these steps have been taken, the company is declared a formally dissolved company.
You should also understand the consequences of dissolving a business:
1) You will have no power to dispose of the property.
2) The company may continue business only for as long as the process of liquidation goes on.
3) With the arrival of the liquidator the powers of the company director come to an end.
Liquidating a business needn’t be a stressful task, provided that the correct procedures are followed.