There are various people are involved or affected by a liquidation process. Apparently it looks worse then it actually is. The term liquidation in simple words means the process in which a company sells its assets to have money to pay off creditors. Liquidation can be a new beginning for many companies, as they pay off their old debts and get the breathing room that is needed to chart a new course.
Liquidation can be a good thing in a case if there have been some bad decisions in the past and new management wants to sell off assets or equipment that is no longer needed. In this liquidation becomes good thing and provides a new beginning to a troubled company.
Basically there are three types of liquidation processes which company will have to go through if they are insolvent.
1 – Members Voluntary Liquidation
In this type of the liquidation process all of the share holders or partners have commonly agreed to it and the total value of the assets to be sold off is excessive than the amount of the debt that is owed to the companies creditors.
2 – Creditors Voluntary Liquidation
This liquidation process is almost similar to the “members voluntary liquidation” only difference is that the amount of debt is more than the value of the assets which are to be liquidated.
3 – Compulsory Liquidation
The liquidation which is ordered by the court is called compulsory liquidation. If you are involved in liquidation process, then it’s better for you to know fully about the liquidation processes and information.
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