You need to sell off stocks, pay the due amount to creditors, and give the remaining assets to
shareholders or partners. Right. With our legal assistance, you can wind up your company
hassle-free and avoid paying unnecessary charges on compliance and audit.
Simply put, Liquidation is the process initiated by a company to close its operations. The company may decide to wind up due to various reasons such as unwillingness to continue with the operations, insolvency and so on. As the term suggests, liquidation of a company refers to liquidating the assets of the company. By initiating the liquidation process, the company may sell its assets to meet obligations and repay liabilities.
If a company is liquidated due to bankruptcy, the liquidator can sell its assets to repay all pending liabilities. The remaining balance, if any, after repayment to the creditors, gets distributed among the shareholders of the company.
Free from debts after liquidation: Once the liquidation process is over, the directors and all company officials are free from all creditor liabilities and pressure.
Avoiding legal action against the company:If the resolution is passed voluntarily by directors, they will neglect legal action taken by the court or the tribunal, and provide a platform to company directors to concentrate on other business opportunities.
Comparingly low cost charged for liquidation: The cost or expenses involved in the liquidation process is relatively low, as charges will be applicable on the sale of assets.
All lease agreements will be cancelled: If any company or entity has entered into a lease for a prescribed time, during the liquidation process, it will terminate all the terms and conditions of the lease. If any penalty has to be paid, it will be deducted from the sale of assets.
Advantages for creditors: After a prolonged struggle, creditors will benefit from the liquidation process as they will be eligible for a default payment, with respect to the proposition of credits given by all creditors.
Winding up of a private limited company can be done in 3 different ways. They are
Members’ Voluntary Winding Up
If a company remains solvent (able to pay the debts) at the time of closure and its directors make a voluntary declaration for the same, it is termed as the Members’ Voluntary Winding Up. Such a declaration should have the following characteristics-
The following steps are necessary to carry out the process of Members’ Voluntary Winding Up-
Creditors' Voluntary Winding Up
if the solvency declaration is not made by the directors and submitted to the registrar, the company is presumed to be insolvent. In such a case, the creditors must meet (usually after the company general meeting) to pass the resolution for winding up and liquidation of the company.
The following steps are necessary to carry out the process of Creditors’ Voluntary Winding Up-
Declaration To ROC
The statement of accounts must be submitted within a month before the submission of the application to wind up the company. This is a declaration to the Registrar of Companies that the contents of the application are only to be considered, and that the company has no other assets or liabilities.
Within a month of submitting the statement of accounts, the application must be submitted along with the documents mentioned above. Our representatives will guide you through the entire procedure.
It takes at least two to three months to complete the closure of your company, but it could take much longer, depending on the findings of the liquidator appointed.
The documents required for the closure of the company are;
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