Many business owners have no call to understand what liquidation is until it’s too late. Put simply, liquidation is the process by which a company that has reached the end of its life is formally closed down and its assets realised (converted into cash).
Although the term is more commonly use in the context of insolvent companies, it may also be used in the context of solvent ones.
When a company goes into liquidation its assets are sold to repay creditors and the business closes down. The company name remains live on Companies House but its status switches to ‘Liquidation’. The removal of the name only comes about on dissolution which is approximately three months after the closure of the liquidation.
There are two main types of liquidation process, solvent and insolvent liquidation.
Solvent liquidation usually involves a director’s retirement, or may be the closure process chosen when a business serves no further useful purpose. This is called a Members’ Voluntary Liquidation (MVL).
Insolvent liquidation occurs when a company cannot carry on for financial reasons. The overall aim of an insolvent liquidation process is to provide a dividend for all classes of creditor, but it is often the case that unsecured creditors receive little, if any, return.
Alya Auditors in the UAE are licensed liquidators with vast experience in all industries, and are available for appointment as liquidator for companies Mainland companies in Dubai,UAE and Free zone Companies like DMCC,DWC,JAFZA,SAIF Zone etc .
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