Liquidation is the type of process that comes under accounting when a company comes to an end. By liquidation, it means when a company is dissolved or winded-up. When all the assets and all kinds of property and capital of the company redistributed to all the members of the company. There is no single answer as to how long does it take to liquidate a company. Everyone should have a basic knowledge of various kinds of liquidation.
- Compulsory Liquidation- When the creditor petitions the court because they think they are unable to pay the debts and make it insolvent. The court can also force you to liquidate the company if a company could not pay its debts or meet the liabilities.
- Member Voluntary Liquidation– In this procedure there is no court involved and the members of the company can commence the liquidation although the company can pay its liabilities
- Creditors’ Voluntary Liquidation– It is a procedure that is commenced by directors rather than creditors because the company can pay its debt. It is asked by all the members of the company before making a compulsory liquidation.
How long does it take for liquidation in a company?
After knowing the basic knowledge of different types of liquidation, it becomes easier to decide what kind of liquidation is required by a company. Firstly, the appointment of the liquidator takes places which require around one to two weeks. But if almost all the shareholders agree to liquidate the company in a short period of time then the company become liquidated within seven days. After this, the members of the company have to sell all the assets of the company and do all the necessary investigation and the paperwork required.
In the case of a compulsory liquidation, all the proceedings could take around three months. After all the work is done from appointing a liquidator to selling the company assets which could take around three months to one year, then the process starts.
Thus, at the end of the whole process, the liquidator sends the whole final report to the creditors.