What is liquidation and how is it related to a company? What is the main purpose of performing company voluntary liquidations? It is very important to understand all the concept associated with it and benefits a company or person can receive through this. Liquidation is a main business step or you can say it as a process mainly performed in United Kingdom under law and business. In this method a company or any part of a company is brought to an end and every ongoing business or works get over. By ending the company they redistribute all the assets and property of the company appropriately. Thus through this it is understood that company comes to its last stage of ending up which is also referred to as winding up or dissolution, although dissolution officially refers to the final stage of liquidation. So, if liquidation concept is clear voluntary liquidation will also become easier to understand.
Liquidation is divided into two parts mainly compulsory and voluntary liquidation. Company voluntary liquidations is a process which is used when the members of a company finally decide to voluntarily wind up its matters, affairs and defront. This liquidation mainly starts in the time when the company passes the resolution, and the company usually ceases to carry on business at that time. Voluntary liquidation is defined as corporate liquidation in which company has been accepted by the shareholders of the company. It stands in adverse to involuntary liquidations. By the help of shareholders vote, company is able to liquidate its assets to free up funds to pay debts. This process is divided into two categories in the UK which are mainly the creditors and the member’s voluntary liquidation. The creditor’s voluntary liquidation is said to those which appear under a state of corporate insolvency. On the other hand the member’s voluntary liquidation is said to those which only require a corporate declaration of bankruptcy. There are some liable advantages of company voluntary liquidations if the company chooses for creditor’s liquidation and those are as below:-
- Avoid court: – If you liquidate voluntarily you can avoid and save from being petitioned by the court, which can help you improve your future business projects. If this does not happen then in compulsory liquidation the petition to wind up your company will be made public a week after it is given to the company directors and during this process anyone will be able to see what’s going on your company and your company is been liquidated etc.
- Protection against accusations of wrongful trading: – When company is trading insolvent they should take care of best interests of its creditors. If not done so it can become wrongful trading and could involve you in a lot of trouble.
- Having a future: – Once you do this you are going to receive full relaxation and you will feel stress free from creditor pressures, constant phone calls from debt collectors and also warnings from HMRC. Thus this old company ends up voluntarily you are able to start new without been burdened.
Thus choosing right option is very important as winding up is very helpful which can change your future thus if you are in trouble you can think for winding up your company and start new with new business.
