What does it mean to go through liquidation?
What does it mean to go through liquidation?
What Is Liquidation? Liquidation in finance and economics is the process of bringing a business to an end and distributing its assets to claimants. It is an event that usually occurs when a company is insolvent, meaning it cannot pay its obligations when they are due.
What does under liquidation mean?
Liquidation is a process in which the company is brought to an end. Also, the assets and property of the company are redistributed to the creditors and owners. Liquidation is also referred to as winding-up or dissolution, although dissolution technically refers to the last stage of liquidation.
What is the common term for liquidation?
Glossary of insolvency terms
| Term | Definition |
|---|---|
| Provisional liquidation | A type of liquidation where a liquidator is appointed as a caretaker to safeguard a company’s assets while the court considers a winding-up application. |
| Realise | Convert assets into cash, usually by selling them. |
What does liquidation mean to customers?
Liquidation. This means it’s all over. The company will be wound up, with the assets sold, debts recovered and creditors paid some or all of what they are owed. A liquidator is appointed by the High Court or by special resolution of shareholders to look after the interests of all creditors.
Is liquidation the same as insolvency?
Insolvency can be considered a financial “state of being”, when a company is unable to pay its debts or when it has more liabilities than assets on its balance sheet, this being legally referred to as “technical insolvency”. Liquidation is the legal ending of a limited company.
What happens when liquidators are appointed?
Once a liquidator is officially appointed, they are in charge of closing down the business and investigating the circumstances that led to the company’s insolvency. Their main purpose is to convert any remaining assets into cash and pay as many creditors as possible with those funds, hoping to pay dividends too.
Who is called as a Liquidators?
A liquidator refers to an officer who is specially appointed to wind up the affairs of a company when the company is closing—typically when the company is going bankrupt. Assets of a company are sold by the liquidator and the resulting funds are used to pay off the company’s debts.
What happens when you liquidate a business?
When a company goes into liquidation its assets are sold to repay creditors and the business closes down. The company name remains live on Companies House but its status switches to ‘Liquidation’. Insolvent liquidation occurs when a company cannot carry on for financial reasons.
Are liquidators regulated?
Who are liquidators in company insolvency? Independent liquidators are licensed and regulated individuals appointed by either an insolvent company’s directors, or the Official Receiver after the initial stages of a compulsory liquidation are complete.
