What is complete liquidation?
"Complete liquidation" is a term used to describe the process of giving up the control and ownership of asset to shareholders, which allows these shareholders to decide how to dispose of these assets. This type of activity occurs when the company decides to closely close and has to compensate for obligations to shareholders and other debtors. Within the agreement, shareholders take responsibility for honoring any outstanding debts to sellers and others, then distribute the remaining assets to each other or sell these assets and distribute cash from the sale according to a type of allocation agreed.
Business begins with the process of complete disposal by stopping engaging in any further effort to produce goods or services or the market for the remaining products in potential sellers. At this point, it focuses on the activities of the company that is preparing to permanently shut down the operation. In this preparation, the total assets and liabilities of the company, including obligations to common and preferredm shareholders.
To speed up the complete liquidation process, the company will transfer ownership of all assets, including all the remaining cash reserves. Together with the receipt of assets, shareholders also take over the remaining debts that the company was closed at a time when the operations were closed. This means that shareholders take responsibility for repayment of the remaining debts, usually by determining a type of schedule that favors the debt, negotiates with creditors to accept less than the amount owed in exchange for considering settled accounts, and using any legal options available to settle these final debts.
As soon as shareholders deal with the remaining debt of the company, they are to use the remaining assets in any way as they consider appropriate. This phase of complete disposal often involves the sale of the remaining real estate or other shares thatThey were not necessary to settle the debt load, and then the distribution of cash between shareholders. The actual amount of compensation provided to each shareholder is usually based on the class of shares and the number of shares. In some cases, the shareholder may decide to accept an asset such as the property or other possession of the company as compensation, provided that the current market value of this asset is to the amount assigned to the holder. Complete liquidation is considered final only if all debt is compensated and each shareholder agreed and received its share in the remaining assets.