“termination of a business by using it’s assets to discharge it’s liabilities”
A liquidation process is not solely due to a business becoming insolvent. A common reason for liquidation is for the directors/shareholders to close a company which has accumulated large reserves and to realise the value in a tax efficient way.
There are 3 types of liquidation:
Members Voluntary Liquidation – where directors/shareholders close a company with large accumulated reserves. In a Members Voluntary Liquidation the company is solvent, creditors are paid in full and the remaining funds transferred to the directors/shareholders. For a more detailed explanation of a Members Voluntary Liquidation click here
Creditors Voluntary Liquidation – where a company can no longer meet it’s debts as they fall due i.e. insolvent. For a more detailed explanation of a Creditors Voluntary Liquidation click here
Court Liquidation – where a company, through either it’s directors or creditors, makes an application through the courts to have a Liquidator appointed
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