What is company liquidation
Liquidation is the name given to the process of closing down a company (or part of it). The assets and property of the company are redistributed and the company structure is taken apart.
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Company liquidation explained
Liquidation is a procedure by which a business entity is brought to an end. There are two main types of liquidation; these are voluntary liquidation or compulsory liquidation.
In the event that a company liquefies, a liquidator is employed in order to investigate the business entities breakdown. The role of the liquidator is to examine the financial affairs of the company to explain the reasons for the company’s failure. Additionally, the liquidator is responsible for selling the assets of the company at a possible profit.
There are various reasons that a company may face liquidation. Some of the causes include; through court order and by special resolution of the shareholders. The most common reason that a company is put into liquidation is due to bankruptcy, for example when company has taken a substantial loan from a financial institution and is unable to pay off the debt.
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