With the rise and fall of the economy nowadays, the business sector is the most harmed aspect in the society.
More and more businesses closes their doors and either sell their companies or leave the stores in a non-functional condition.
The growing resort of these affected businesses nowadays is to liquidate their business.
Liquidating refers to the generation of money in order to pay-off debts acquired through evaluating their business' assets if there are by a liquidator.
Liquidation however varies in different situations.
Some businesses opt to choose liquidation as a last resort while some just find themselves being assessed by a group of liquidators.
The first type of liquidation is called the member's voluntary liquidation.
In this type of liquidation, the owners of a certain company, meaning its stockholders, shareholders or partners, have chosen by their free will to engage in liquidating their assets seeing that this is the only process by which they can settle and pay-off their increasing-by-the-minute debts.
In this type of liquidation however, the spirit of volunteerism is present because of the fact that the amount of projected liquidation is greater than the amount of debt to be paid off.
In simpler terms, the shareholders still have some gains by liquidating making them not complete losers in the long run.
Another type is the creditor's voluntary liquidation.
In this type of liquidation, it is still the owners of the company who decides for the liquidation process.
The aspect which differentiates this type from the former is that there is no volunteerism involved for they have no choice but to liquidate their assets in order to pay off their debts.
Also, in this case, the debts they acquire fully exceed the amount of liquidated assets they could earn.
Meaning, there is no gain or benefit from it.
In worst cases, there could still be deficits should the liquidated assets not cover the entire amount of debt.
This characteristic of creditor's voluntary liquidation makes it the most common type of liquidation nowadays.
The last classification of liquidation is called the compulsory liquidation.
As the term suggests- the act of liquidating the assets involves not a single act of volunteering or decision making on the part of the owners.
This type happens with the order of a court for the business' declared bankruptcy or insolvency.
This happens because the business has no other means of clearing their debts.
Also, the court is the one who turns the business over to the liquidators to assess the possible amount of assets to be acquired from the failing business.
For a company who either perceives the infeasibility of paying off their debts or wants to make their final gains before closing their business, the option to liquidate their assets is a good choice- at least by doing it before the court does.
By this manner, they may avoid facing the dilemma and stigma of being liquidated compulsorily.
Avoiding debts however is still the most ideal intervention a business can do so as to avoid these kinds of options which may lose your business out of your control.
More and more businesses closes their doors and either sell their companies or leave the stores in a non-functional condition.
The growing resort of these affected businesses nowadays is to liquidate their business.
Liquidating refers to the generation of money in order to pay-off debts acquired through evaluating their business' assets if there are by a liquidator.
Liquidation however varies in different situations.
Some businesses opt to choose liquidation as a last resort while some just find themselves being assessed by a group of liquidators.
The first type of liquidation is called the member's voluntary liquidation.
In this type of liquidation, the owners of a certain company, meaning its stockholders, shareholders or partners, have chosen by their free will to engage in liquidating their assets seeing that this is the only process by which they can settle and pay-off their increasing-by-the-minute debts.
In this type of liquidation however, the spirit of volunteerism is present because of the fact that the amount of projected liquidation is greater than the amount of debt to be paid off.
In simpler terms, the shareholders still have some gains by liquidating making them not complete losers in the long run.
Another type is the creditor's voluntary liquidation.
In this type of liquidation, it is still the owners of the company who decides for the liquidation process.
The aspect which differentiates this type from the former is that there is no volunteerism involved for they have no choice but to liquidate their assets in order to pay off their debts.
Also, in this case, the debts they acquire fully exceed the amount of liquidated assets they could earn.
Meaning, there is no gain or benefit from it.
In worst cases, there could still be deficits should the liquidated assets not cover the entire amount of debt.
This characteristic of creditor's voluntary liquidation makes it the most common type of liquidation nowadays.
The last classification of liquidation is called the compulsory liquidation.
As the term suggests- the act of liquidating the assets involves not a single act of volunteering or decision making on the part of the owners.
This type happens with the order of a court for the business' declared bankruptcy or insolvency.
This happens because the business has no other means of clearing their debts.
Also, the court is the one who turns the business over to the liquidators to assess the possible amount of assets to be acquired from the failing business.
For a company who either perceives the infeasibility of paying off their debts or wants to make their final gains before closing their business, the option to liquidate their assets is a good choice- at least by doing it before the court does.
By this manner, they may avoid facing the dilemma and stigma of being liquidated compulsorily.
Avoiding debts however is still the most ideal intervention a business can do so as to avoid these kinds of options which may lose your business out of your control.