What are the different reasons for liquidation?
Liquidation occurs when a company or organization is closed, its assets are sold and sales revenues are divided to creditors and other individuals or entities with claims for society. Some liquidations are mandatory, in which case this process will appear as a result of the court order. Other liquidations are voluntary, in this case people run the organization to decide to stop operations. The most common reasons for liquidation are bankruptcy, legal problems or lack of desire between people who run it to maintain it. The party, which wishes to initiate the process, must submit to the reason for the reason for liquidation, and if the judge approves the application, the company must stop operations and administrators are usually appointed by the court to ensure the sale of its assets. The court ordered that liquidation often appeared when people under control of companies do not issue shareholders of shareholders or, as a result of not paying its creditors. The Court appointed the review of reviewclaims based on the entity's assets and handles demands on the basis of seniority of claims, which usually means that creditors are paid before shareholders.
Company bankruptcies usually result in liquidation, but the laws in many places also require companies that are insolvent, but not yet bankruptcy to liquidate. Companies are technically insolvent when they lack sufficient income to cover debt obligations. Insurance companies and other financial companies are often exposed to compulsory liquidation if they are insolvent.
Some long -established companies are liquidated if changes in the law mean that the company can no longer function. Companies have been involved in the activities are prohibited, they must stop operations and liquidation in order to prevent the prosecution of engaging in illegal activities. Other companies stop operations and liquids as a result of changes in the law that makes specific tradeModel obsolete. This often happens when the laws concerning imports, exports and changes in information and society sharing that concerned the provision of technology to comply with previous laws have no reason to exist.
Voluntary liquidation sometimes occurs, because shareholders of unsuccessful companies conclude the company before it goes bankrupt, but in other situations shareholders or owners of the company willingly liquidate the company. If the company was created for the purpose of providing services for a particular event, the company owners usually liquidate it after the event created for completion. In other situations, owners of companies who want to retire but cannot find suitable buyers for firmurement.