Creditor’s Voluntary Liquidation- Insolvent Company Liquidation

Liquidation is the well-known process of closing the company or business permanently. In this process the process of terminating the business is carried out in different ways. These ways are decided as per the way of doing the business and the type of company. There are two types of companies including solvent and insolvent. Insolvent companies use two types of liquidations. Creditor's voluntary liquidation is one of those liquidations used for insolvent companies.

In creditor's voluntary liquidation director or shareholder of the company insists the liquidation. The meeting informing the creditors regarding the insolvency of the company is held by a special person appointed as insolvency practitioner. It also calls for a liquidator for the company. Liquidator is the person who helps the company's assets to be sold properly.

The liquidator is also responsible for distributing the sold assets among the creditors of the company properly. The process of liquidation includes lots of process and these are carried out step by step by respected people. Other than the above things canceling the pending leases is also the responsibility of the liquidator and then it also closes down the company permanently. So that the creditor's voluntary liquidation is one type of insolvent company liquidation and very much helpful in selling the business and paying off the creditors.

The remaining techniques will be discussed in the part of Canadian Liquidation.

Member Voluntary Liquidation - For Solvent Companies

Liquidation is the process of terminating the business permanently and this is of many types as well. There are many ways of liquidation depending upon the type of company or the type of business. There are two types of company including solvent company and insolvent company. Different types of liquidation are used for both types. The attribute of solvency is mapped using balance sheets and the cash flow test.

For solvent company the type of liquidation used is known as member voluntary liquidation and it differs in the way of operation from others. In this the closure of any company is decided by the shareholders and a lot of decisions are also made by them. In this process the director of any company makes the declaration to sell the company within a year to pay off the debts. After this the creditors are paid, and the remaining assets and property is divided among the shareholders.

There are many reasons of selling a solvent company and one of that reasons include the choice of the owner to sell it. It depends upon the owner's choice to sell the company for any particular reason. It can also be done when assets are required to be transferred to the other company of the same group.


The remaining techniques will be discussed in the part of Canadian Liquidation.