It is important to know that the liquidation and bankruptcy of a company are processes that the company’s owners can only carry out. As a company that offers consulting services, we suggest that you come to us for consultations before you decide on the liquidation of the company.
What is liquidation?
Liquidation of a company is a procedure made when the company does not have sufficient financial resources to cover all its obligations. More precisely, liquidation is a procedure in which a company ceases to exist, and its assets and funds are distributed to other natural and legal persons based on law. Liquidation is usually divided into compulsory liquidation, determined by a court or other state body to settle unsettled claims, and voluntary liquidation, which occurs by a decision of the company’s owner or management that has concluded that it is no longer able to perform its regular activities.
Voluntary Liquidation
When a company decides on voluntary liquidation, it can be done in two ways:
- Shortened liquidation process
- Regular liquidation procedure
The Shortened procedure is the most uncomplicated procedure of liquidation of the company. It is carrying out so that the owner signs a statement that he has no debts and will be liable for any debts with the property within three years. This procedure will be initiated if the company did not have turnover on the account, which would mean that the owner can quickly liquidate the company with which he did nothing. It should be noted in this case, and those salary contributions are not considered debt. This abbreviated procedure of voluntary liquidation can also be initiated if the owners know that they have no outstanding receivables for the company that operated. The risk is that someone will report their claim within three years, collected from the founder’s personal property.
The regular liquidation procedure will be complying when the company had turnover through the account. Still, no outstanding claims are necessary to submit a certificate from the tax administration that there are no due obligations. The Central Registry offers a request to delete the company.
It is important to bring the accounting to zero when on the same date when the founder states at the notary.
The bankruptcy of the company
The bankruptcy of a company is a procedure determined by law, and it is initiated against the debtor’s property. If the company had turnover through the account and does not have the funds to pay the creditors’ debts, it can initiate bankruptcy proceedings. Bankruptcy can be activated by creditors or the owner (s) of the company. The founder (s) or a creditor initiates bankruptcy by submitting to the Commercial Court a request accompanied by a list of creditors, a list of debtors, a list of assets, a balance sheet and income statement, and other necessary documentation. The court appoints the bankruptcy trustee, notifies the debtors, the tax administration. When the court determines that the debts are higher than the claims, it concludes the bankruptcy procedure and will liquidate the business entity.
If the founder submits the Reintegration Plan and the creditors adopt it and the court, the business entity continues to operate, which would mean that the bankruptcy procedure does not necessarily lead to the company’s liquidation from the central register.
