What Is Dissolution and Liquidation?

Dissolution and liquidation is the liquidation carried out voluntarily or by force when an enterprise is unsuitable or unable to continue operations due to the expiration of its operating period or due to other business reasons.

Dissolution

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Dissolution and liquidation is the liquidation carried out voluntarily or by force when an enterprise is unsuitable or unable to continue operations due to the expiration of its operating period or due to other business reasons.

1. Set up a liquidation group. If the company is dissolved for legal reasons, a liquidation group shall be established within 15 days from the date of the cause of dissolution to begin liquidation. The liquidation team of a limited liability company consists of shareholders,

1. The original and copy of the company's "Business Legal Person Business License";

2. Identity certificate of the company's legal representative;

3. The company's Articles of Association and relevant business registration materials;

4. Operating status of the company

The steps for the dissolution and liquidation account processing of an enterprise are: preparing the dissolving balance sheet; calculating the liquidation expenses; calculating the profit and loss of the sale of property and materials; calculating and recovering the book claims, paying off debts and gains and losses; accounting for the compensation of previous years' losses; Allocation; prepare the liquidation profit and loss statement, and the balance sheet after liquidation.

Specific account processing will be described with examples:

1. The balance sheet is prepared on the date of termination of operations.

The two are both related and different, and their relationship is shown in:

(1) The purpose of liquidation is to end the various claims, debt relationships and legal relationships of the liquidated enterprise;

(2) In the process of dissolution and liquidation, when the enterprise is found to be insolvent, it shall immediately apply to the court for bankruptcy liquidation.

The difference between the two is reflected in:

(1) The nature of liquidation is different. Dissolution and liquidation belong to voluntary liquidation or administrative liquidation, while bankruptcy liquidation belongs to judicial liquidation;

(2) The legal status of the liquidated enterprises is different. After the dissolution and liquidation of the enterprise was announced, its legal person status was not completely lost, and it still enjoyed restricted rights and economic behavior during the liquidation period. For a company that has been declared bankrupt and liquidated, its legal person rights and actions have been completely lost, and the liquidation institution has obtained the right to manage and dispose of the property of the bankrupt enterprise according to law.

(3) The emphasis of dealing with the interest relationship is different. Dissolution and liquidation generally do not have the problem of insolvency. In addition to ending the unfinished business of the enterprise, collecting debts and paying off debts during the liquidation, the focus is on allocating the remaining assets of the enterprise and adjusting the interests of the investors within the enterprise. The reason for bankruptcy liquidation is insolvency. Therefore, the liquidation is mainly to adjust the interest relationship between creditors outside the enterprise, that is, to reasonably distribute the limited assets of the enterprise among creditors.