The procedure will be handled differently for a compulsory liquidation that it would be dealt with in a voluntary liquidation, so the following information is just a broad overview of the process.Although there are events which must occur prior to petitioning the Court, it is first necessary to have a basic understanding of the different types of liquidation.In the case of any liquidation to which section 332 applies, no loss shall be recognized to the liquidating corporation on any distribution in such liquidation. in the case of stock or voting trust certificates acquired from an employee or retiree of such corporation, the spouse, child, or estate of such employee or retiree or a trust created by such employee or retiree which is described in section 1361(c)(2) of the Internal Revenue Code of 1986 (or treated as described in such section by reason of section 1361(d) of such Code), and Written determinations for this section These documents, sometimes referred to as "Private Letter Rulings", are taken from the IRS Written Determinations page; the IRS also publishes a fuller explanation of what they are and what they mean. It appears that the IRS updates their listing every Friday.
Members Voluntary Liquidation – When a company is solvent and able to pay outstanding debt, a Members Voluntary Liquidation (MVL) can be commenced. Creditors Voluntary Liquidation –,’ the first word is actually Creditors.
Whilst there are two main types of liquidation, voluntary liquidation does not involve the court whereas compulsory liquidation a court process where a petition to wind up the company is presented.
A synopsis of each is as follows: Compulsory Liquidation – In this case, creditors petition the Court to liquidate the company because they believe it to be insolvent and incapable of paying its debts.
We are often asked about the process and procedure to company liquidation and unfortunately, there is no single answer to this question.
It is important to know whether the liquidation is voluntary or compulsory and whether or not the company is solvent.