WHAT IS WINDING UP?
Some companies are so far in debt that
they can't continue their business operations.
They are likely to "liquidate". Their assets
are sold for cash by a court appointed liquidator
who is an IP. Administrative and legal expenses
are paid first, and the remainder goes to
creditors.
Secured creditors will have their collateral
returned to them. If the charged asset does
not realise sufficient funds to repay them
in full, they will be grouped with other unsecured
creditors for the rest of their claim. Unsecured
creditors will be notified of the liquidation
and should file a claim in case there is money
left for them to receive a payment. The order
of priority of creditors is the same as set
out above in respect of Administration Orders.
Shareholders generally don't receive anything
in return for their investment. But, in the
unlikely event that creditors are paid in
full, shareholders will be notified and given
an opportunity to file claims for anything
left over. |
