The liquidation occurs when a company cannot pay its debts and is in bankruptcy. To better understand the liquidation and its precursor (receivership), read on!
Before the winding-up, receivership
Judicial reorganization proceedings will be opened when the company is unable to meet current liabilities with available assets and that it can repay its debts. In other words, the receivership began when the company is in a situation of great financial difficulty or “termination”.
The relief is intended to help the company continue its activity, maintain its number of employees, and wiping out its debts.
Liquidation procedure
The liquidation itself is a decision of the tribunal that occurs when the company is in a situation of cessation of payments and that the receivership is no longer possible. It is therefore stopping full and immediate of all activity and the dissolution of the company.
The tribunal means at that time where a liquidator or representative (or, if the business continues, a judicial administrator). This person will be responsible for the sale of the assets of the company and the allocation of the price between the creditors, according to the order of precedence laid down in chapter VI of the commercial law (claims of wages in first). By indicating a judicial liquidator, the court takes off automatically the former head of the company.
The assets of the company are sold at public auction, with prominently the sale at the best price, per unit of output or isolation. Stock and equipment of the company are sold either at public auction or OTC.
It is totally late to the company prior to the official publication of the closing for lack of assets. A judgment of closing for lack of assets that does not sanction creates a ban to resume prosecution for creditors.