Process of liquidating
You’ll need to review the company’s assets and liabilities just before making the declaration.Write a statement saying that the directors have assessed the company and believe it can pay its debts, with interest at the official rate.An asset that is not performing well in the markets may also be partially or fully liquidated to minimize or avoid losses.An investor who needs cash to fulfill other non-investment obligations, such as bill payments, vacation expenses, car purchase, tuition fees, etc. Financial advisors tasked with allocating assets to a portfolio usually consider, among other factors, why the investor wants to invest a certain amount of money and for how long the investor would like to invest for.The unsecured creditors would be paid off with the cash from liquidation, and if any funds are left after settling all creditors, the shareholders will be paid according to the proportion of shares each holds with the insolvent company.Not all liquidation is as a result of insolvency, however.Liquidate means to convert assets into cash or cash equivalents by selling them on the open market.Liquidate is also a term used in bankruptcy procedures in which an entity chooses or is forced by a legal judgment or contract to turn assets into a "liquid" form (cash). In the investments arena, liquidation occurs when an investor decides to close out his or her position in a particular asset or security.
There are, of course, exceptions; you will have heard the horror stories of personal liability and disqualification, but if any problems are going to arise, our job is to pin-point them beforehand, and we will advise the appropriate action.
The shareholders appoint a liquidator who dissolves the company by collecting the assets of the solvent company, liquidating the assets, and distributing the proceeds to employees who are owed wages and to creditors in order of priority.
Any cash that remains is then distributed to preferred shareholders before common shareholders get a cut.
They will explain each step of the process to you and do everything they can to put your mind at ease.
Generally it takes a month or two for the entire process to complete, a lot of it depends on how quickly creditors and other associated people can get information back to us.
When a company fails to repay its creditors due to financial hardship and prolonged losses in its operations, a bankruptcy court may order a compulsory liquidation of the business assets if the company is found to be insolvent.