What is meant by liquidation What are the modes of winding up?

What are the modes of winding up?

The three modes of winding up are (a) Winding Up by the National Company Law Tribunal (the Tribunal) (b) Voluntary Winding Up under section 59 of the Code; (c) the ‘Fast Track Exit Scheme’ applicable to defunct companies under section 248 of the Act.

What is meant by liquidation of company?

Liquidation in finance and economics is the process of bringing a business to an end and distributing its assets to claimants. … As company operations end, the remaining assets are used to pay creditors and shareholders, based on the priority of their claims.

What do you mean by liquidate?

Liquidate means converting property or assets into cash or cash equivalents by selling them on the open market. Liquidation similarly refers to the process of bringing a business to an end and distributing its assets to claimants. Liquidation of assets may be either voluntary or forced.

What is meant by liquidation winding up of a company?

Liquidation is the process a debt-laden company initiates to wind up its operations and sell its assets in order to repay said liabilities and other obligations. A company is liquidated when it is ascertained that the business is not in any state to continue.

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What are the modes of winding up and causes?

A. Compulsory Winding-Up:

  • A company may be wound-up by the Court under the following cases:
  • (i) Special Resolution of the Company:
  • (ii) Default:
  • (iii) Not commencing or suspending the Company:
  • (iv) Reduction of Members:
  • (v) Inability to pay Debts:
  • (vi) The Just and Equitable Clause:
  • i.e., Who can apply for Winding-up? (

What is the liquidation process?

Liquidation is the process of converting a company’s assets into cash, and using those funds to repay, as much as possible, the company’s debts. Liquidation results in the company being shut down. … Court liquidation – starts as a result of a court order, usually made after an application by a creditor of the company.

What is liquidation and types of liquidation?

Company Liquidation of an insolvent company has two types Creditors Voluntary Liquidation and Compulsory Liquidation. Business continuity or business restart can only usually take place through Creditors Voluntary Liquidation. … Company liquidation of a solvent company will use a Members Voluntary Liquidation.

What is liquidation example?

When a business closes and sells all of its merchandise because it is bankrupt, this is an example of liquidation. When you sell your investment to free up the cash, this is an example of liquidation of the investment. … The selling of the assets of a business as part of the process of dissolving the business.

What is another name for liquidation?

What is another word for liquidation?

bankruptcy administration
insolvency receivership
closing ruin
shutting down winding up
selling out Chapter 11

Why is liquidation important?

Liquidation ensures assets are distributed among creditors in an orderly way and helps minimise the risk of insolvent trading. It also gives shareholders, creditors, and directors the opportunity to have an independent expert investigate and manage the liquidation.

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