There can be several grounds for the insolvency of a business and as liquidation of the assets is vital for the enterprise. Liquidation is closing the functioning of the firm and turning the assets into cash to pay the debts to creditors or paying back the loan. The discontinuation of the business is a joint decision involving creditors, shareholders, members and all concerned having financial interests in the company.
Classification of liquidation
Do you ponder,“How long does it take to liquidate a company?” the process usually depends upon the type of liquidation. As the selling of assets may be due to the actual crunch or a decision by the director and other participants, regardless of the cause the time taken can be understood by reading the classification.
- Voluntary liquidation: The decision to liquidate the company is by voluntarily by the directors. They come to realise that the restructuring of the company is not viable. The creditors and shareholders are informed conducting a meeting. The meeting can be physical or through video conferencing but the main purpose is to intimate them about the decision and there should be approval of the same by them. About 75% of the shareholders must be in favour of the resolution. The liquidation can take place on short notice and time taken can be a minimum of seven days. Generally, for joint decision a liquidatorget appointed for taking the process further. This can take few The proceedings may take months or years thereafter.
- Compulsory liquidation: The Company has no control over the sale of assets and government charges tax on the assets. The creditors demand liquidation of the company and a period of 18 or 21 days for the process to be completed. On any disapproval, the creditor can apply in court with 14 days written notice. The threat and court proceedings itself take about three months. Then further, the liquidation process takes place by appointing a liquidator.
These surely would have guided you on the time consumed for liquidation process. Reviewing online websites may provide you with a fair idea of the costs that are incurred on liquidating your business.