LIQUIDATION

A formal process where the company ceases to trade, its assets sold and the proceeds distributed to creditors.

Creditors Voluntary Liquidation

Voluntary liquidation occurs when the members of a company resolve to voluntarily wind up its affairs and dissolve.

The company may have ceased to trade, however, sufficient funds allow creditors to be paid in full and a distribution to the shareholders. This is a tax efficient way in which funds are transferred to shareholders as the Revenue will usually treat a distribution in a member’s voluntary liquidation as a return of capital rather than income, resulting in a lower tax charge on the recipient.

Members Voluntary Liquidation

The main purpose of a liquidation where the company is insolvent is to collect its assets, determine the outstanding claims against the company, and satisfy those claims in the manner and order prescribed by law.

The holder of a charge being either fixed, floating or both, created specifically to secure a debt has the power to appoint an insolvency practitioner as receiver to recover the debt.

This would normally entail the receiver acting as agent of the company, and either selling the business as a going concern or closing it and realising the assets.

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