Bankruptcy bankruptcy law liquidate liquidating liquidation
Liquidation often has a negative connotation for this reason. Case Study If eliminating dividends, laying off employees, selling subsidiaries, restructuring debt, and, finally, reorganization under Chapter 11 bankruptcy fail to resuscitate a business, the likely outcome is liquidation.
The proceeds of the sale are used to discharge any outstanding liabilities to the creditors of the company.
The liquidator should only take steps under section 230 if the corporate debtor or its business is viable and it is more suitable than selling the corporate debtor as a going concern.
It should be done within a stipulated time frame failing which the corporate debtor should be liquidated.
If there are insufficient funds to pay all creditors (INSOLVENCY), preferential creditors are paid first (for example the INLAND REVENUE for tax due), then ordinary creditors pro rata.
If there is a surplus after payment of all creditors this is distributed pro rata amongst the ordinary shareholders of the company. the process by which a JOINT-STOCK COMPANY's existence as a legal entity ceases by ‘winding up’ the company.