Bankruptcy can be a complicated process for those who are scared to utter the term and those who simply don’t want to admit that it’s happening. One part of the bankruptcy process for businesses is known as liquidation of assets. For business owners, liquidation is the absolute end of their business, which means the business will cease to be when this process is complete.
When a company files for bankruptcy, it begins a lengthy process that may or may not end in liquidation. Some companies file for bankruptcy and they only do so for reorganization of their debts. Others file with the intent to go through liquidation and finalize all of their accounts.
A company that goes through liquidation legally terminates its operations as a business entity. The liquidation process is typically led by the company’s shareholders or creditors and a petition is filed in court for the winding up of the company.
When liquidation occurs, all of the company’s assets are sold to pay creditors and to settle all accounts. To dissolve the company, the court will assign a liquidator to monitor the process. The company’s shareholders receive any finances that might be leftover following the repayment of all the company’s creditors. At this point, the company has formally stopped operating and is considered no more. This means no future dealings can occur as the company.
The liquidation of a company can occur in two ways: voluntarily when the shareholders file the petition or compulsory when the company’s creditors file a petition. Liquidation can occur because of the financial instability of the company or for any other legitimate reason. For example, a company could go through liquidation simply because the shareholders have decided it is time. The company doesn’t necessarily have to be in financial trouble or even going through bankruptcy.
Liquidation is a stressful process to endure when going through bankruptcy. Our experienced Chapter 7 attorneys can help you through the ordeal in Long Island, New York.