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If your company is going to be liquidated, you will probably have some questions as to exactly what happens during the process.Actually, there are two ways a company can go into liquidation – voluntarily, in a voluntary liquidation, or involuntarily, in a compulsory liquidation.Collins English Dictionary - Complete & Unabridged 2012 Digital Edition © William Collins Sons & Co. In finance and economics, liquidation is an event that usually occurs when a company is insolvent, meaning it cannot pay its obligations as and when they come due. Bankruptcy Code governs liquidation proceedings; solvent companies can also file for Chapter 7, but this is uncommon.In a compulsory liquidation, a party lodges a winding up petition with the court to have the insolvent company wound up in order to recover the outstanding debt.
Liquidation usually means the company’s trading stops and it’s assets are turned into cash or “liquidated”.In other words, whether the liquidation is voluntary or compulsory, the end result will be the same.