What is the liquidation of a company?

liquidate inventory phoenix az

The liquidation puts an end to the activity of the company by the sale of the last assets. We must not confuse liquidation and dissolution. Unsurprisingly, liquidation is a liquidation procedure. This means that one will seek to sell assets – assets or claims – to recover the cash. The advantage: it is easier to allocate cash between partners and potential creditors than to allocate property or receivables. Liquidation,  which liquidate inventory phoenix az  thus marks the end of a business, maybe amicable or judicial.

liquidate inventory phoenix azLiquidation and dissolution: what difference

The difference between dissolution and liquidation is essentially a chronological one. The liquidation comes right after the dissolution. The dissolution is indeed the decision to terminate the activity in advance. Liquidation corresponds to the implementation of this decision. As the name implies, its sole purpose is to liquidate the assets held by the company. In general, these two stages are indissociable because they allow to completely  extinguish a society liquidate inventory phoenix az . However, there are dissolutions without liquidation.

In  which cases to liquidate a company? The reasons for liquidation

Various causes may lead to the liquidation of a company: The cessation of payments, necessitating a compulsory liquidation. The  arrival at the scheduled term for the company, as specified in the statutes, if no decision of extension has been taken. By default, companies have a  duration of 99 years. The statutes may nevertheless provide for a shorter duration.

  • The misunderstanding of the partners leading to paralysis of society.
  • Loss of equity.
  • The cancellation of the partnership agreement.
  • The realization of the social object.
  • The simple will of the partners, eager to put an end to the project.

Any other cause expressly stipulated in the statutes.

Whatever the cause of the liquidation, it must have been expressly provided for in the company’s articles of association. An exception: if the company is in the cessation of payments, the judicial liquidation is automatic.

Different forms of liquidation

The term “liquidation” is, in fact, a multitude of realities. Amicable or voluntary liquidation corresponds to a desire of the partners to terminate the partnership agreement, for various reasons. The judicial liquidation, meanwhile, is suffered: the company is in a catastrophic financial situation.

Judicial liquidation

Judicial liquidation, as the name suggests, requires recourse to justice. It is reserved for companies whose economic and financial situation is irreparably compromised.

Definition of judicial liquidation

Judicial liquidation, alongside safeguarding and judicial recovery, is one of the three main procedures for companies in difficulty.