Termination or operations and redistribution of company assets is referred to as business liquidation. This may occur to just a section of the firm or the entire business. Other names referring to the process are dissolution and winding-up. However, technically speaking dissolution only refers to the last stage of winding-up and not the whole process. To find professionals in business liquidation Arlington TX should be given priority.
There are two types of winding-up, that is, compulsory also called creditor dissolution and voluntary also called shareholder dissolution. There are also situations in which voluntary liquidations are regulated by creditors of the company. Dissolution of a company is often petitioned by certain parties. These parties vary from one jurisdiction to another. However, generally, there are five kinds of parties who can lodge for the dissolution of a company with the courts.
The five parties that may petition for dissolution are the company itself, contributories, creditors, secretary of state, and official receiver. Grounds for dissolution also differ among jurisdictions. In general, a company reserves the right to terminate its operations and wind-up. Therefore, that is the first ground for liquidation.
Secondly, a company may be dissolved if it is incorporated as a corporation but has not received a trading certificate within 12 months after registration. Thirdly, a company is put up for dissolution if it does not begin operations for which it is registered within 12 months. Fourthly, statute requires members of a company to amount to a certain number and if the number falls below that requirement, dissolution is permitted.
Companies may also be dissolved if they cannot pay off their debts. Lastly, if it becomes clear that dissolving the business would be fair and equitable, a party may lodge a case with the court towards that end. In practice, most companies dissolved in the United States do so due to the last two reasons. A fair and winding-up allows for application of strict legal rights give all shareholders equitable consideration in the company.
The liquidation process starts immediately a petition is filed with the court system to dissolve a company. Upon making such a petition, all litigations are restrained and all dispositions are rendered void. The court receives the petition and decides whether the dissolution should proceed or it should not. The process is aided by court-appointed official receivers or liquidators. The board may propose individuals for the court to appoint.
Voluntary dissolution occurs when a company decides that it wants to terminate its operations and wind-up. All ongoing operations are halted immediately when the instance that decision is made. Insolvent companies can be allowed to voluntarily wind up through a process called creditor voluntary liquidation. The decision to liquidate is to be made by the board.
The distribution of assets in this process follows a certain priority. The priority is governed by strict laws. The laws ensure fairness and equality in the distribution process of assets. Therefore, all claims are settled in the required order to avoid disputes.
There are two types of winding-up, that is, compulsory also called creditor dissolution and voluntary also called shareholder dissolution. There are also situations in which voluntary liquidations are regulated by creditors of the company. Dissolution of a company is often petitioned by certain parties. These parties vary from one jurisdiction to another. However, generally, there are five kinds of parties who can lodge for the dissolution of a company with the courts.
The five parties that may petition for dissolution are the company itself, contributories, creditors, secretary of state, and official receiver. Grounds for dissolution also differ among jurisdictions. In general, a company reserves the right to terminate its operations and wind-up. Therefore, that is the first ground for liquidation.
Secondly, a company may be dissolved if it is incorporated as a corporation but has not received a trading certificate within 12 months after registration. Thirdly, a company is put up for dissolution if it does not begin operations for which it is registered within 12 months. Fourthly, statute requires members of a company to amount to a certain number and if the number falls below that requirement, dissolution is permitted.
Companies may also be dissolved if they cannot pay off their debts. Lastly, if it becomes clear that dissolving the business would be fair and equitable, a party may lodge a case with the court towards that end. In practice, most companies dissolved in the United States do so due to the last two reasons. A fair and winding-up allows for application of strict legal rights give all shareholders equitable consideration in the company.
The liquidation process starts immediately a petition is filed with the court system to dissolve a company. Upon making such a petition, all litigations are restrained and all dispositions are rendered void. The court receives the petition and decides whether the dissolution should proceed or it should not. The process is aided by court-appointed official receivers or liquidators. The board may propose individuals for the court to appoint.
Voluntary dissolution occurs when a company decides that it wants to terminate its operations and wind-up. All ongoing operations are halted immediately when the instance that decision is made. Insolvent companies can be allowed to voluntarily wind up through a process called creditor voluntary liquidation. The decision to liquidate is to be made by the board.
The distribution of assets in this process follows a certain priority. The priority is governed by strict laws. The laws ensure fairness and equality in the distribution process of assets. Therefore, all claims are settled in the required order to avoid disputes.
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