Most people consider liquidation as the premature end of a business. On the contrary, company liquidation or business liquidation can prove to be a new beginning. Therefore, it is recommended that you get familiar with the different types of liquidation processes so that you can deal with the process a lot more easily.
What is voluntary liquidation?
This particular liquidation process is initiated by the company directors. Quite often, shutting down the company is the only viable solution left when an organisation cannot succeed in a highly competitive market.
Therefore, in this case, the company directors will decide to liquidate the company. However, the approval of the shareholders is required before doing so. They will then appoint a liquidator to carry out the entire liquidation process.
After filing for liquidation, the liquidator will evaluate the assets of the company. The liquidator will then sell off the assets so that the company can pay off any pending debts to creditors. This means that the selection of an efficient liquidator or liquidation firm plays an important role in the success of the voluntary liquidation process.
Compulsory liquidation:
Compulsory liquidation is a little more complicated than voluntary liquidation. In this type of liquidation, the creditors file a petition in court to close the company. The group of directors can also file a petition in court. The company can also make an appeal against this petition within a stipulated time-period.