Liquidation involves finalising the financial affairs of an organisation, selling off the businesss assets to repay any debts, and dismantling the companys structure. Often confused with bankruptcy, liquidation is the only way to wind down operations and shut down an organisation in an orderly way.
Liquidation commonly occurs if a company cant meet debt obligations or if the members wish to cease operating. It applies to companies and the businesses operating under a company structure.
Bankruptcy, on the other hand, applies to individuals, including sole traders and partners in partnerships, who are declared insolvent. Bankruptcy is also an interim legal state, lasting three years, whereas liquidation leads to a permanent winding down o…
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