Liquidation

Question 1

What is Liquidation?

Answer 1

The process of closing a business and distributing its assets to repay creditors eventually dissolving the business

Question 2

What is the process of Liquidation?

Answer 2

• Company is unable to repay debts
• Often following a creditor statutory demand
• Applications to the high court
• Proceedings are advertised and called in open court
• If the court is not satisfied the company can not repay its debts a liquidator is appointed
• Takes control of company assets, sells them and distributes the proceeds to creditors based on priority

Question 3

The difference between bankruptcy and Liquidation

Answer 3

Liquidation applies to companies, while bankruptcy applies to individuals (or businesses under certain legal systems).