What is Liquidation?

The liquidation of a company refers to the act of liquidating the company's creditor's rights and debts in accordance with the law after the company's statutory dissolution cause or the dissolution cause provided for in the company's articles of association. According to the provisions of the Company Law, the company shall set up a liquidation team within 15 days when the company is dissolved due to a resolution of the shareholders' meeting, due to the expiration of the business period stipulated in the company's articles of association, to dissolve due to an impasse, or to be forced to dissolve due to an illegal act. The company's liquidation group refers to an organization that deals with the company's creditor's rights and debts in accordance with the law after the company's reasons for liquidation occur. The company's liquidation group is the representative of the company during the liquidation period. ^[1]

The liquidation of a company refers to the act of liquidating the company's creditor's rights and debts in accordance with the law after the company's statutory dissolution cause or the dissolution cause provided for in the company's articles of association. According to the provisions of the Company Law, the company shall set up a liquidation team within 15 days when the company is dissolved due to a resolution of the shareholders' meeting, due to the expiration of the business period stipulated in the company's articles of association, to dissolve due to an impasse, or to be forced to dissolve due to an illegal act. The company's liquidation group refers to an organization that deals with the company's creditor's rights and debts in accordance with the law after the company's reasons for liquidation occur. ^[1]

Bankruptcy liquidation refers to the liquidation carried out in accordance with the provisions of the bankruptcy law when the company is unable to settle its due debts. "

Non-bankruptcy liquidation refers to the liquidation carried out in accordance with the provisions of the Company Law when the property is sufficient to repay the debt when the company is dissolved. During non-bankruptcy liquidation, the company's assets are paid separately for liquidation costs, employee salaries, social insurance costs and statutory compensation.

Arbitrary liquidation is also called free liquidation, which refers to liquidation carried out by the company in accordance with the will of shareholders and the provisions of the company's articles of association. Such liquidation generally does not have a sequence of procedures, and whether or not it can be fully paid, claims that cannot be liquidated will not be eliminated as the liquidation ends. Arbitrary liquidation is usually applicable to joint ventures and unlimited companies.

Statutory liquidation refers to liquidation that must be performed in accordance with the procedures prescribed by law. The statutory liquidation stipulates the order of the liquidation of the company's property, the legal liquidation ends, and the company's legal personality is eliminated in accordance with procedures. The liquidation provided by the Company Law of China is statutory liquidation.