The term ‘liquidation’ in a financial or economic context refers to ceasing the activities of a business and distributing its assets to its creditors, shareholders and other claimants. This usually occurs after a business has become unable to pay its debts and other obligations as they fall due which means that it has become insolvent. A business can, however, also be wound up when its owners no longer require it which is referred to as a solvent liquidation.
Liquidation services are providers that are skilled at winding up such businesses. They perform the following functions:
• Realize the value of the assets of the business
• Resolve all outstanding financial matters of the business including the settlement of all claims with creditors
• Distribute any surplus assets to the shareholders of the business
These services provide an efficient method for winding up a company in a controlled manner and returning assets to the relevant stakeholders.