Company Law - See attachment Essay Example | Topics and Well Written Essays - 2500 words

Company Law - See attachment - Essay Example 1 Liquidation can voluntary or even compulsory. It is said to be voluntary when it is initiated by the will of the company through a resolution of the equity holders. It is said to be compulsorily carried out when the order of the court becomes the cause of the winding up of the company. 2 In a nut shell, there are two basic kinds of Liquidation procedures whose nature is explained in detail below: Voultary Winding Up In this kind of liquidation the company goes on to willingly wind up the affairs of the company and distribute the assets of the company after paying off the liabilities of the company. ... nding up Creditors’ voluntary winding up is usually due to the company becoming insolvent and unable to pay off its liabilities in due course and the company is perused by the creditors in order to prevent further debts accruing and to receive the due liabilities through the realization of the assets of the company in a process of liquidation. 3 Compulsory Winding up This kind of winding up takes place when the company is ordered to be wound up by an order of the court. There are numerous potential ways of this procedure to institute however the most general one is through the petition filed by the creditors on the argument that the company is unable to pay off its liabilities in due course and since it has not been deemed likely to arrive at a voluntary agreement on liquidation, the compulsory winding up via the court is instituted. The nature of the compulsory winding up is such that the company comes under the process of liquidation under an order from the court on grounds of inability to pay the debts or where the company has certain going concern issues which cannot be resolved through a successful surgery of the company’s affairs or the provision of cash inflows or bailouts where the company may be able to restore the balance of its affair on the positive side.4 However, a request to obtain a leave to prosecute a company which is being compulsorily wound up may be made to the Court who gave the order of winding up of the company. Consequences of Winding up When a company goes into liquidation, mainly due to the compulsory winding up process there is usually a cause of inability to pay its debts whereby the company has to face certain consequences during and after the liquidation and the victims of those consequences are mainly shareholders, employees and even