The business world is a brutal one! While there are so many opportunities out there, you gotta be ready to put up a fight to succeed. Unfortunately, some companies don’t make the cut and eventually close. Now, that’s where company liquidation comes in. But what exactly is this process? What effects does it have? And what are the different types of liquidation? Well, read on if you wanna find out the answer to all that and more! However, before you do, make sure you check out our blog if you need help finding services or learning about them. Now, let’s jump right in, shall we?
What Is Company Liquidation?
To put it simply, company liquidation is the process a company goes through to put an end to its business. So basically, it’s when that business sells its assets because it cannot pay its dues. As the actual operations end, the remaining assets like physical locations and machinery are sold. The money from these sales goes to pay for creditors and shareholders based on priority! Now, as with everything, there are several types of company liquidation.
Types of Liquidation
So, as we already mentioned, there are several types of company liquidation! Let’s check them out together now:
- Complete Liquidation: This type, as the name suggests, means that the business will sell all of its assets. Usually this is because it is completely closing up and deregistering.
- Partial Liquidation: Here, the company isn’t closing, and will stay operational to a certain extent. However, it will sell part of its assets to keep things afloat.
- Voluntary Liquidation: This is when the company itself decides to liquidate for many reasons. It could be because it faced financial difficulties where selling the assets is the only way to pay creditors back. Or because this company will go through some kind of restructuring which leads to shutting down some operations.
- Compulsory Liquidation: Unlike voluntary liquidation, compulsory company liquidation is induced by either creditors or the government. If a business can’t pay off its debts, creditors could push to dissolve the business to get their money back. And if that business is not following rules and regulations with its operations, the government will induce this liquidation.
Now, before we move on, we have a very important note here. Whether it’s voluntary or compulsory, these types of company liquidation can actually be either complete or partial!
Wanna Learn More About Services to Help Your Business?
Hopefully you never need services for a company liquidation. However, if you’re here, then you’re interested in outsourcing some work! Luckily for you, Noraal is right here, and it offers a wide range of services that SMEs would definitely need. Whether you need CFO advisory, auditing, or accounting services, we got you. So, if you’re ready to elevate your company and want brand new business strategies, contact us today! We’re always ready to help your business succeed more than ever.