Business in Liquidation

Business in liquidation is a business that is in the closing process or the owner is winding up his business due to loss or some other reason. While liquidating a business all the assets of the business are turned into cash via selling them or auctioning them so that the cash can be paid to the creditors.

If the business is in the process of liquidation first of all a liquidator is appointed either by the shareholders of the business or by the court. The liquidator supervises the entire process of liquidation that includes turning assets into cash, discharging the liabilities of the company and distribution of the funds among the shareholders of the business. In the end after taking all the above mentioned steps the business is formally dissolved of liquidated.

There are a number of consequences of liquidation such as the company has no longer the power to sell or dispose its property, the business of the company becomes extremely limited, and all the directors lose their powers from the time a liquidator is appointed. All the employees of the company are dismissed in the court’s order.

There are different types of liquidation depending upon the circumstances and condition of the business. Types of liquidation are:

  • Compulsory Liquidation that is done by the order of the court
  • Voluntary Liquidation that is done on the share holder resolution
  • Members voluntary liquidation that is done on the consent of members


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