Business Reorganization

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Company liquidations usually signal the end of a company. A true company liquidation involves closing the business or company, ending the business itself, and the sale of all its assets. You can do it as part of a bankruptcy proceeding or simply as a way to close the business and wrap up all business dealings.

You will also hear experts call company liquidation a “dissolution” or a “winding up”. All these terms refer to the same thing – the end of the company.

Company Liquidation Not a Simple Process

It sounds like a simple idea – you close your business or store, and sell the contents, make a few dollars, pay some bills, get your ball and go home. But company liquidation is not that simple a process. Depending on the size of the company and the circumstances under which it is closing, it can be very short or quite long.

It’s not uncommon for company liquidation sales, for example, to continue for months. If the company is going bankrupt, the process can usually take a bit longer than if the company is voluntarily selling assets as a way to close the company.

Usually, the idea behind company liquidation is converting assets to cash. You then use the cash to pay bills, help pay debts under your company’s bankruptcy, or to take home a few dollars from a failed venture.

Sometimes a court of law requires a company liquidation. This happens under several different circumstances. For example, a company is a publicly held and has not been issued a trading certificate within 12 months. On the other hand, the court can force liquidation if a company is an “old public company.” In a third case, the court can require it if a company has not carried out any business transactions within a year of its incorporation. Another situation is when the company is unable to pay its own debts (and likely has filed bankruptcy). Finally, the court may force it if it’s considered a just and decent way for the company to end its business life.

Generally speaking, most compulsory company liquidations are due to either the company being unable to pay its debts, or the court considers it the best way to shut the company down. Only occasionally do the other circumstances come into play.

Company liquidations can also be voluntary, in the case where members of the company or the owners decide to liquidate it. Often business continues as usual during the company liquidation in this case.

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