Company liquidation refers to the legal process of bringing a company’s operations to an end in an orderly fashion to distribute remaining assets to stakeholders, undertaken when it can no longer continue functioning as a going concern.
Key Features of Company Liquidation
- A licensed insolvency practitioner is appointed to assess viability of winding up the business in the interests of creditors and members
- They realize assets by sale, collect monies owed, settle all claims and pay outstanding liabilities
- Upon closure of affairs and deregistration, any surplus assets may return to members if all debts are satisfied
Example of Company Liquidation
A small manufacturing outfit petitioned the court for a supervised liquidation after pandemic disruptions drained capital and demand plunged, triggering repayment issues that jeopardized suppliers and employees.
Key Takeaways
While lamenting business failure, liquidation ensures an organized conclusion respecting ownership rights and legal obligations, preempting further liabilities through a regulated winding down process supervised by an experienced insolvency professional.