{"id":9955,"date":"2023-11-02T13:03:25","date_gmt":"2023-11-02T07:33:25","guid":{"rendered":"https:\/\/www.tickertape.in\/glossary\/?p=9955"},"modified":"2023-11-02T13:03:27","modified_gmt":"2023-11-02T07:33:27","slug":"liquidation-meaning-process-types-and-examples","status":"publish","type":"post","link":"https:\/\/www.tickertape.in\/glossary\/liquidation-meaning-process-types-and-examples\/","title":{"rendered":"Liquidation &#8211; Meaning, Types, Process with Examples"},"content":{"rendered":"\n<p>Businesses often aim to grow, maximise their profitability and prosper. However, in some cases, they might be forced to wind up operations. This process is referred to as liquidation.&nbsp;<\/p>\n\n\n\n<p>It involves selling off assets to pay off debts or stakeholders. But why do companies liquidate their assets? In this blog, we will delve deeper into the term &#8211; Liquidation and also explain in detail the process of liquidation and different types of liquidation process in India.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_22 counter-hierarchy counter-numeric\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\">You will Learn About: <\/p>\n<span class=\"ez-toc-title-toggle\"><a class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" style=\"display: none;\"><i class=\"ez-toc-glyphicon ez-toc-icon-toggle\"><\/i><\/a><\/span><\/div>\n<nav><ul class=\"ez-toc-list ez-toc-list-level-1\"><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.tickertape.in\/glossary\/liquidation-meaning-process-types-and-examples\/#What-is-liquidation\" title=\"What is liquidation?\">What is liquidation?<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.tickertape.in\/glossary\/liquidation-meaning-process-types-and-examples\/#Liquidation-Important-Points-To-Note\" title=\"Liquidation &#8211; Important Points To Note\">Liquidation &#8211; Important Points To Note<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.tickertape.in\/glossary\/liquidation-meaning-process-types-and-examples\/#Types-of-liquidation\" title=\"Types of liquidation\">Types of liquidation<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.tickertape.in\/glossary\/liquidation-meaning-process-types-and-examples\/#Insolvency-and-Bankruptcy-Code-IBC\" title=\"Insolvency and Bankruptcy Code (IBC)\">Insolvency and Bankruptcy Code (IBC)<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.tickertape.in\/glossary\/liquidation-meaning-process-types-and-examples\/#Liquidation-process\" title=\"Liquidation process\">Liquidation process<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.tickertape.in\/glossary\/liquidation-meaning-process-types-and-examples\/#What-are-assets\" title=\"What are assets?\">What are assets?<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.tickertape.in\/glossary\/liquidation-meaning-process-types-and-examples\/#Paying-off-creditors\" title=\"Paying off creditors\">Paying off creditors<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.tickertape.in\/glossary\/liquidation-meaning-process-types-and-examples\/#Liquidation-specialists\" title=\"Liquidation specialists\">Liquidation specialists<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.tickertape.in\/glossary\/liquidation-meaning-process-types-and-examples\/#Liquidation-order\" title=\"Liquidation order\">Liquidation order<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.tickertape.in\/glossary\/liquidation-meaning-process-types-and-examples\/#Liquidator\" title=\"Liquidator\">Liquidator<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/www.tickertape.in\/glossary\/liquidation-meaning-process-types-and-examples\/#Consequences-of-liquidation\" title=\"Consequences of liquidation\">Consequences of liquidation<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/www.tickertape.in\/glossary\/liquidation-meaning-process-types-and-examples\/#Costs-and-fees-of-liquidating-a-company\" title=\"Costs and fees of liquidating a company\">Costs and fees of liquidating a company<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/www.tickertape.in\/glossary\/liquidation-meaning-process-types-and-examples\/#Examples-of-liquidation\" title=\"Examples of liquidation\">Examples of liquidation<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/www.tickertape.in\/glossary\/liquidation-meaning-process-types-and-examples\/#What-happens-when-a-company-goes-into-liquidation\" title=\"What happens when a company goes into liquidation?\">What happens when a company goes into liquidation?<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/www.tickertape.in\/glossary\/liquidation-meaning-process-types-and-examples\/#Timeframe\" title=\"Timeframe\">Timeframe<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/www.tickertape.in\/glossary\/liquidation-meaning-process-types-and-examples\/#Do-employees-get-paid\" title=\"Do employees get paid?\">Do employees get paid?<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/www.tickertape.in\/glossary\/liquidation-meaning-process-types-and-examples\/#What-happens-to-the-directors\" title=\"What happens to the directors?\">What happens to the directors?<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/www.tickertape.in\/glossary\/liquidation-meaning-process-types-and-examples\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><li class=\"ez-toc-page-1 ez-toc-heading-level-2\"><a class=\"ez-toc-link ez-toc-heading-19\" href=\"https:\/\/www.tickertape.in\/glossary\/liquidation-meaning-process-types-and-examples\/#FAQs\" title=\"FAQs\">FAQs<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"What-is-liquidation\"><\/span><strong>What is liquidation?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In simple terms, liquidation is the process of winding up a business. It is an activity wherein the assets of the business are sold to generate funds. These funds are then used to settle existing debts and pay off creditors.\u00a0<\/p>\n\n\n\n<p>In some cases, the liquidation definition can also involve selling off or divesting some of the business\u2019s assets to cut losses. In such cases, liquidation would not mean a full closure. For instance, if a business closes its operation in certain cities or countries, it would also fall under liquidation.<\/p>\n\n\n\n<p><em>As an investor, knowing the company&#8217;s total debts is essential to evaluate company&#8217;s financial performance. With <a href=\"https:\/\/www.tickertape.in\" target=\"_blank\" rel=\"noreferrer noopener\">Tickertape<\/a> you can find the total debt held by a company. Launch the <a href=\"https:\/\/www.tickertape.in\/screener\/equity\" target=\"_blank\" rel=\"noreferrer noopener\">Stock Screener<\/a> and find &#8216;Total Debt&#8217; in &#8216;Add Filters&#8217;. <\/em><\/p>\n\n\n\n<div class=\"wp-block-uagb-advanced-heading uagb-block-2b41ae60\"><h2 class=\"uagb-heading-text\"><span class=\"ez-toc-section\" id=\"Liquidation-Important-Points-To-Note\"><\/span>Liquidation &#8211; Important Points To Note<span class=\"ez-toc-section-end\"><\/span><\/h2><\/div>\n\n\n\n<ul>\n<li>Liquidation is the winding up of a business and sell business assets to pay off liabilities.<\/li>\n\n\n\n<li>Liquidation can be forced or voluntary.<\/li>\n\n\n\n<li>There is a specific liquidation process wherein expert liquidators are appointed to conduct the necessary protocol.&nbsp;<\/li>\n<\/ul>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"Types-of-liquidation\"><\/span><strong>Types of liquidation<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full\"><img decoding=\"async\" loading=\"lazy\" width=\"621\" height=\"447\" src=\"https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/02\/image-5.png\" alt=\"\" class=\"wp-image-9959\" srcset=\"https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/02\/image-5.png 621w, https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/02\/image-5-300x216.png 300w, https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/02\/image-5-300x216@2x.png 600w\" sizes=\"(max-width: 621px) 100vw, 621px\" \/><figcaption class=\"wp-element-caption\">Image source: https:\/\/corpbiz.io\/<\/figcaption><\/figure><\/div>\n\n\n<p>There are different types of liquidation that a business can undergo. These are as follows \u2013<\/p>\n\n\n\n<ol>\n<li><strong>Forced<\/strong><strong> or compulsory <\/strong><strong>liquidation<\/strong><\/li>\n<\/ol>\n\n\n\n<p>A forced or compulsory liquidation happens when the creditors of a business lose faith in the business\u2019s repayment capacity. They appeal to the court to get the business dissolved, and the court may pass the liquidation order.&nbsp;<\/p>\n\n\n\n<ol start=\"2\">\n<li><strong>Members <\/strong><strong>voluntary liquidation<\/strong><\/li>\n<\/ol>\n\n\n\n<p>Liquidation not only happens when the business becomes insolvent or bankrupt. In some cases, the owners might decide to wind up the business even if it is solvent. In such cases, the members would opt for voluntary liquidation.<\/p>\n\n\n\n<ol start=\"3\">\n<li><strong>Creditors <\/strong><strong>voluntary liquidation<\/strong><\/li>\n<\/ol>\n\n\n\n<p>This type of liquidation happens when the business becomes insolvent and fears legal intervention or compulsory liquidation. As such, the Board decides to liquidate voluntarily since it is not financially feasible to continue operations.&nbsp;<\/p>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"Insolvency-and-Bankruptcy-Code-IBC\"><\/span><strong>Insolvency and Bankruptcy Code (IBC)<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The Insolvency and Bankruptcy Code, or IBC, is a tool for resolving business insolvency.&nbsp;<\/p>\n\n\n\n<p>It is a code to help businesses take care of their insolvency issues. Under the code, debtors and creditors start their recovery process when the business is still continuing. All possible steps are taken to ensure business continuity and solvency. However, if every measure fails, liquidation may serve as the last resort.<\/p>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"Liquidation-process\"><\/span><strong>Liquidation process<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The liquidation process under the IBC code can be listed in the following order \u2013<\/p>\n\n\n\n<ul>\n<li>The liquidation starts after the AA passes a liquidation order<\/li>\n\n\n\n<li>A liquidator is appointed, and his fee is negotiated and determined<\/li>\n\n\n\n<li>The liquidator consults with stakeholders and collects the debts the company is yet to receive<\/li>\n\n\n\n<li>The liquidator forms a liquidation estate wherein the assets of the business are listed with their values<\/li>\n\n\n\n<li>The creditors are paid off<\/li>\n\n\n\n<li>Unsold assets are distributed among the stakeholders<\/li>\n<\/ul>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"What-are-assets\"><\/span><strong>What are assets?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Assets are the different types of investments, property and other things that a business owns which can generate revenue. In liquidation, the assets are sold off to realise funds which are then distributed among the creditors and shareholders.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-large\"><img decoding=\"async\" loading=\"lazy\" width=\"1024\" height=\"537\" src=\"https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/02\/image-2-1024x537.png\" alt=\"\" class=\"wp-image-9956\" srcset=\"https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/02\/image-2-1024x537.png 1024w, https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/02\/image-2-300x157.png 300w, https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/02\/image-2-1536x806.png 1536w, https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/02\/image-2-300x157@2x.png 600w\" sizes=\"(max-width: 1024px) 100vw, 1024px\" \/><figcaption class=\"wp-element-caption\">Image source: https:\/\/www.shopify.com\/<\/figcaption><\/figure><\/div>\n\n\n<p>Assets of a business include the following \u2013<\/p>\n\n\n\n<ul>\n<li>Plant and equipment<\/li>\n\n\n\n<li>Investments<\/li>\n\n\n\n<li>Inventory<\/li>\n\n\n\n<li>Furniture and fixtures<\/li>\n\n\n\n<li>Land, building and property<\/li>\n\n\n\n<li>Vehicles<\/li>\n\n\n\n<li>Any outstanding income that the business is supposed to receive<\/li>\n\n\n\n<li>Accounts receivable<\/li>\n\n\n\n<li>Cash in hand or at the bank<\/li>\n<\/ul>\n\n\n\n<p>Use <a href=\"https:\/\/www.tickertape.in\/screener\/equity\" target=\"_blank\" rel=\"noreferrer noopener\">Tickertape Stock Screener<\/a> to know the value of total current assets held by a company. Not just that, there are other 200+ filters to analyse a listed company thoroughly. Explore Now! <\/p>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"Paying-off-creditors\"><\/span><strong>Paying off creditors<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The funds realised from selling assets are used to pay off creditors. The priority of payment, however, depends on the type of creditors that a business has. Given below are the types of creditors listed in order of their priority \u2013<\/p>\n\n\n\n<ol>\n<li><strong>Secured creditors<\/strong><\/li>\n<\/ol>\n\n\n\n<p>Debts that are secured against an asset are paid first. For instance, a <a href=\"https:\/\/www.tickertape.in\/glossary\/loan-meaning-interest-rates-types-and-repayment\/\">loan<\/a> against property is a secured loan. If the business sells off the property, the loan needs to be settled first.<\/p>\n\n\n\n<ol start=\"2\">\n<li><strong>Unsecured creditors<\/strong><\/li>\n<\/ol>\n\n\n\n<p>After the secured creditors are paid off, the unsecured creditors take precedence.<\/p>\n\n\n\n<ol start=\"3\">\n<li><strong>Shareholders<\/strong><\/li>\n<\/ol>\n\n\n\n<p>After all the creditors are paid off, the remaining funds are distributed among shareholders. In this case, also, preference shareholders are paid first, followed by equity shareholders.<\/p>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"Liquidation-specialists\"><\/span><strong>Liquidation<\/strong><strong> specialists<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Liquidation is a complicated process. That is why specialised businesses conduct the liquidation process on behalf of companies. Businesses can hire liquidation specialists to buy their assets, sell them off, generate funds and then pay off creditors.&nbsp;<\/p>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"Liquidation-order\"><\/span><strong>Liquidation<\/strong><strong> order<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>A liquidation order is an order to liquidate a business. Only the Adjudicating Authority (AA) can pass the liquidation order, and that too under the following instances \u2013<\/p>\n\n\n\n<ul>\n<li>When a business resolution plan is not submitted on time<\/li>\n\n\n\n<li>If the resolution plan is rejected by the National Company Law Tribunal (NCLT), which is the AA<\/li>\n\n\n\n<li>If the Committee of Creditors (CoC) approve the liquidation<\/li>\n\n\n\n<li>If the corporate debtor contradicts or opposes the approved plan of resolution<\/li>\n<\/ul>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"Liquidator\"><\/span><strong>Liquidator<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Once the AA has passed the liquidation order, the authority appointed for making a resolution plan can become the liquidator.&nbsp;<\/p>\n\n\n\n<p>The AA can also replace the liquidator if needed. The IBC code specifies the eligibility of a liquidator. Moreover, the liquidator would be duty-bound to oversee and complete the whole liquidation process.&nbsp;<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full\"><img decoding=\"async\" loading=\"lazy\" width=\"259\" height=\"194\" src=\"https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/02\/image-3.png\" alt=\"\" class=\"wp-image-9957\"\/><figcaption class=\"wp-element-caption\">Image source: http:\/\/pawthelaw.info\/<\/figcaption><\/figure><\/div>\n\n\n<h2><span class=\"ez-toc-section\" id=\"Consequences-of-liquidation\"><\/span><strong>Consequences of <\/strong><strong>liquidation<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Once the liquidation proceedings start, the rights of shareholders and owners are lost. The appointed liquidator determines the manner of liquidating the assets.&nbsp;<\/p>\n\n\n\n<p>If the company winds up, employees might end up losing jobs. Moreover, the name of the company is also removed from the Registrar.&nbsp;<\/p>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"Costs-and-fees-of-liquidating-a-company\"><\/span><strong>Costs and fees of liquidating a company<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The costs and fees for liquidating a company are specified under the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016. It is calculated as a percentage of the amount realised by selling off the assets. Moreover, the percentage reduces with time.&nbsp;<\/p>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"Examples-of-liquidation\"><\/span><strong>Examples of liquidation<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Some businesses in India that underwent liquidation include the following \u2013<\/p>\n\n\n\n<ul>\n<li>DHFL<\/li>\n\n\n\n<li>Essar Steel<\/li>\n\n\n\n<li>Bhushan Steel<\/li>\n\n\n\n<li><a href=\"https:\/\/www.tickertape.in\/stocks\/jet-airways-india-JET\" target=\"_blank\" rel=\"noreferrer noopener\">Jet Airways<\/a><\/li>\n\n\n\n<li>Bhushan Power and Steel<\/li>\n<\/ul>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"What-happens-when-a-company-goes-into-liquidation\"><\/span><strong>What happens when a company goes into <\/strong><strong>liquidation<\/strong><strong>?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>When a company goes into liquidation, its name is removed from the Registrar. The employees also lose their jobs, and shareholders might suffer a loss of <a href=\"https:\/\/www.tickertape.in\/glossary\/what-is-capital-definition-of-capital-types-and-its-importance\/\">capital<\/a> if their stocks do not fetch the right price.<\/p>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"Timeframe\"><\/span><strong>Timeframe<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The Insolvency and Bankruptcy Board of India has specified the timeframe for completing the liquidation. It is as follows \u2013<\/p>\n\n\n\n<ul>\n<li>If claims from creditors have been received \u2013 the liquidation process should be completed within 270 days from the date of initiation of the process.<\/li>\n\n\n\n<li>If claims from creditors have not been received \u2013 the liquidation process should complete within 90 days.<\/li>\n<\/ul>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"Do-employees-get-paid\"><\/span><strong>Do employees get paid?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Payment to employees is usually made in full during the liquidation of a company if employees were working when the resolution professional was appointed (to manage the company as a going concern). In other cases, employees might not get paid.&nbsp;<\/p>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"What-happens-to-the-directors\"><\/span><strong>What happens to the directors?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Directors lose their managerial and decision-making powers when the company goes into liquidation.&nbsp;<\/p>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span><strong>Conclusion<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Companies may voluntarily or, due to several reasons, wind up their business. This process is termed liquidation. The assets of a company are sold off during the liquidation process to pay off creditors. IBC in India resolves liquidation and bankruptcy issues for companies. Understand the liquidation process to read businesses and their activities better and to analyse good <a href=\"https:\/\/www.tickertape.in\/glossary\/investment-meaning-types-how-to-invest-and-savings-vs-investments\/\">investment<\/a> options.&nbsp;<\/p>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"FAQs\"><\/span><strong>FAQs<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"wp-block-uagb-faq uagb-faq__outer-wrap uagb-block-05b9945e uagb-faq-icon-row uagb-faq-layout-accordion uagb-faq-expand-first-true uagb-faq-inactive-other-true uagb-faq__wrap uagb-buttons-layout-wrap uagb-faq-equal-height\" data-faqtoggle=\"true\" role=\"tablist\">\n<div class=\"wp-block-uagb-faq-child uagb-faq-child__outer-wrap uagb-faq-item uagb-block-34eaa793\" role=\"tab\" tabindex=\"0\"><div class=\"uagb-faq-questions-button uagb-faq-questions\"><span class=\"uagb-icon uagb-faq-icon-wrap\"><svg xmlns=\"https:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 448 512\"><path d=\"M432 256c0 17.69-14.33 32.01-32 32.01H256v144c0 17.69-14.33 31.99-32 31.99s-32-14.3-32-31.99v-144H48c-17.67 0-32-14.32-32-32.01s14.33-31.99 32-31.99H192v-144c0-17.69 14.33-32.01 32-32.01s32 14.32 32 32.01v144h144C417.7 224 432 238.3 432 256z\"><\/path><\/svg><\/span><span class=\"uagb-icon-active uagb-faq-icon-wrap\"><svg xmlns=\"https:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 448 512\"><path d=\"M400 288h-352c-17.69 0-32-14.32-32-32.01s14.31-31.99 32-31.99h352c17.69 0 32 14.3 32 31.99S417.7 288 400 288z\"><\/path><\/svg><\/span><span class=\"uagb-question\"><strong>Are bonds considered debts in liquidation?<\/strong><\/span><\/div><p class=\"uagb-faq-content\">Yes, bonds are debts paid off during a company&#8217;s liquidation.\u00a0<\/p><\/div>\n\n\n\n<div class=\"wp-block-uagb-faq-child uagb-faq-child__outer-wrap uagb-faq-item uagb-block-f21e8dec\" role=\"tab\" tabindex=\"0\"><div class=\"uagb-faq-questions-button uagb-faq-questions\"><span class=\"uagb-icon uagb-faq-icon-wrap\"><svg xmlns=\"https:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 448 512\"><path d=\"M432 256c0 17.69-14.33 32.01-32 32.01H256v144c0 17.69-14.33 31.99-32 31.99s-32-14.3-32-31.99v-144H48c-17.67 0-32-14.32-32-32.01s14.33-31.99 32-31.99H192v-144c0-17.69 14.33-32.01 32-32.01s32 14.32 32 32.01v144h144C417.7 224 432 238.3 432 256z\"><\/path><\/svg><\/span><span class=\"uagb-icon-active uagb-faq-icon-wrap\"><svg xmlns=\"https:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 448 512\"><path d=\"M400 288h-352c-17.69 0-32-14.32-32-32.01s14.31-31.99 32-31.99h352c17.69 0 32 14.3 32 31.99S417.7 288 400 288z\"><\/path><\/svg><\/span><span class=\"uagb-question\"><strong>Can a company undergoing liquidation continue trading?<\/strong><\/span><\/div><p class=\"uagb-faq-content\">No, a company in liquidation cannot transact or trade.\u00a0<\/p><\/div>\n\n\n\n<div class=\"wp-block-uagb-faq-child uagb-faq-child__outer-wrap uagb-faq-item uagb-block-0e92d866\" role=\"tab\" tabindex=\"0\"><div class=\"uagb-faq-questions-button uagb-faq-questions\"><span class=\"uagb-icon uagb-faq-icon-wrap\"><svg xmlns=\"https:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 448 512\"><path d=\"M432 256c0 17.69-14.33 32.01-32 32.01H256v144c0 17.69-14.33 31.99-32 31.99s-32-14.3-32-31.99v-144H48c-17.67 0-32-14.32-32-32.01s14.33-31.99 32-31.99H192v-144c0-17.69 14.33-32.01 32-32.01s32 14.32 32 32.01v144h144C417.7 224 432 238.3 432 256z\"><\/path><\/svg><\/span><span class=\"uagb-icon-active uagb-faq-icon-wrap\"><svg xmlns=\"https:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 448 512\"><path d=\"M400 288h-352c-17.69 0-32-14.32-32-32.01s14.31-31.99 32-31.99h352c17.69 0 32 14.3 32 31.99S417.7 288 400 288z\"><\/path><\/svg><\/span><span class=\"uagb-question\"><strong>What is the difference between insolvency and liquidation?<\/strong><\/span><\/div><p class=\"uagb-faq-content\">Liquidation is the process of closing down a business voluntarily or involuntarily. Insolvency is the main reason or cause that can trigger bankruptcy or liquidation.\u00a0<\/p><\/div>\n\n\n\n<div class=\"wp-block-uagb-faq-child uagb-faq-child__outer-wrap uagb-faq-item uagb-block-f1ee05b1\" role=\"tab\" tabindex=\"0\"><div class=\"uagb-faq-questions-button uagb-faq-questions\"><span class=\"uagb-icon uagb-faq-icon-wrap\"><svg xmlns=\"https:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 448 512\"><path d=\"M432 256c0 17.69-14.33 32.01-32 32.01H256v144c0 17.69-14.33 31.99-32 31.99s-32-14.3-32-31.99v-144H48c-17.67 0-32-14.32-32-32.01s14.33-31.99 32-31.99H192v-144c0-17.69 14.33-32.01 32-32.01s32 14.32 32 32.01v144h144C417.7 224 432 238.3 432 256z\"><\/path><\/svg><\/span><span class=\"uagb-icon-active uagb-faq-icon-wrap\"><svg xmlns=\"https:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 448 512\"><path d=\"M400 288h-352c-17.69 0-32-14.32-32-32.01s14.31-31.99 32-31.99h352c17.69 0 32 14.3 32 31.99S417.7 288 400 288z\"><\/path><\/svg><\/span><span class=\"uagb-question\"><strong>What is the priority of debt or credit claims?<\/strong><\/span><\/div><p class=\"uagb-faq-content\">The debt or credit claims on the business are settled in a specific order. This order determines the priority of claims. It is as follows \u2013<br>&#8211; Secured creditors are paid off first<br>&#8211; Unsecured creditors are paid next<br>&#8211; Shareholders are paid at the end<\/p><\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Liquidation is the process of winding up of a business and sell business assets to pay off liabilities. Know more about liquidation, its types, etc. in this blog.<\/p>\n","protected":false},"author":96,"featured_media":9962,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"spay_email":""},"categories":[1],"tags":[1929],"jetpack_featured_media_url":"https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/02\/05.png","uagb_featured_image_src":{"full":["https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/02\/05.png",2086,1086,false],"thumbnail":["https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/02\/05-150x150.png",150,150,true],"medium":["https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/02\/05-300x156.png",300,156,true],"medium_large":["https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/02\/05.png",768,400,false],"large":["https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/02\/05-1024x533.png",770,401,true],"1536x1536":["https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/02\/05-1536x800.png",1536,800,true],"2048x2048":["https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/02\/05-2048x1066.png",2048,1066,true],"authorship-box-avatar":["https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/02\/05-150x150.png",150,150,true],"authorship-box-related":["https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/02\/05-70x70.png",70,70,true],"post-thumbnail":["https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/02\/05-270x180.png",270,180,true],"contentberg-main":["https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/02\/05-770x515.png",770,515,true],"contentberg-main-full":["https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/02\/05-1170x508.png",1170,508,true],"contentberg-slider-stylish":["https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/02\/05-900x515.png",900,515,true],"contentberg-slider-carousel":["https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/02\/05-370x370.png",370,370,true],"contentberg-slider-grid-b":["https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/02\/05-554x466.png",554,466,true],"contentberg-slider-grid-b-sm":["https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/02\/05-306x466.png",306,466,true],"contentberg-slider-bold-sm":["https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/02\/05-150x150.png",150,150,true],"contentberg-grid":["https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/02\/05-370x245.png",370,245,true],"contentberg-list":["https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/02\/05-260x200.png",260,200,true],"contentberg-list-b":["https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/02\/05-370x305.png",370,305,true],"contentberg-thumb":["https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/02\/05-87x67.png",87,67,true],"contentberg-thumb-alt":["https:\/\/www.tickertape.in\/glossary\/wp-content\/uploads\/2023\/02\/05-150x150.png",150,150,true]},"uagb_author_info":{"display_name":"Nikitha","author_link":""},"uagb_comment_info":1,"uagb_excerpt":"Liquidation is the process of winding up of a business and sell business assets to pay off liabilities. Know more about liquidation, its types, etc. in this blog.","_links":{"self":[{"href":"https:\/\/www.tickertape.in\/glossary\/wp-json\/wp\/v2\/posts\/9955"}],"collection":[{"href":"https:\/\/www.tickertape.in\/glossary\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.tickertape.in\/glossary\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/glossary\/wp-json\/wp\/v2\/users\/96"}],"replies":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/glossary\/wp-json\/wp\/v2\/comments?post=9955"}],"version-history":[{"count":5,"href":"https:\/\/www.tickertape.in\/glossary\/wp-json\/wp\/v2\/posts\/9955\/revisions"}],"predecessor-version":[{"id":10727,"href":"https:\/\/www.tickertape.in\/glossary\/wp-json\/wp\/v2\/posts\/9955\/revisions\/10727"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/glossary\/wp-json\/wp\/v2\/media\/9962"}],"wp:attachment":[{"href":"https:\/\/www.tickertape.in\/glossary\/wp-json\/wp\/v2\/media?parent=9955"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.tickertape.in\/glossary\/wp-json\/wp\/v2\/categories?post=9955"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.tickertape.in\/glossary\/wp-json\/wp\/v2\/tags?post=9955"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}