What is Liquidation?

Liquidation is a legal process by which a legal entity is closed down, because the business has become insolvent.

There are two main types of liquidation.

When to apply for liquidation?

A company or close corporation is insolvent when the business liabilities exceed its assets. If the business conduct business while factually insolvent, the director(s) will be held personally responsible for any debt incurred.

Whether the business is able to pay its debts when they become due and payable.

No trading is taking place

Summary

The business is seen as a separate legal entity in our law; thus shareholders, directors, or members cannot be held liable for the business debt unless the shareholder, director, or member put up personal security or suretyship. The process will be conducted through a High Court application. The process of each business is unique and different.