LIQUIDATION
This article deals with the LIQUIDATION topic of the CAIIB NOV 2023 EXAM and CAIIB NOV 2023 Study Material.
On its website, IIBF had published information about CAIIB registration and exam dates. Candidates for the CAIIB must now be relieved after waiting impatiently for any news regarding the dates of the CAIIB in November.
The Dates for CAIIB NOV 2023 are- 27 Nov, 4 Dec, and 10 Dec 2023
Now that we know the Examination Dates, Let’s take our discussion further about Liquidation.
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WHAT IS LIQUIDATION?
The termination of a business or business division is known as liquidation. Assets are sold by the company to cover debts and other liabilities. The remaining money is divided among the owners, shareholders, and investors after all claims have been resolved.
The majority of firms fail owing to insolvency or subpar company performance. Alternatively, it can be brought on by major investors quitting or a corporate reorganisation. Following liquidation, the company’s name is also struck off the list of registered businesses.
Dissolution and winding up are other terms for liquidation. A winding up is a strategic choice that is typically made to exit a failing asset or enterprise. Assets can include real estate, buildings, equipment, tools, machinery, furnishings, vehicles, and inventories. When these assets are unable to produce sufficient returns to cover operating costs, the company is liquidated. To reduce losses, winding up is performed.
To manage the dissolution professionally, one hires a liquidator or an insolvency practitioner. After that, the liquidator makes money by selling corporate property on the open market. This pays off creditors and lenders in full. In addition, liquidators charge a fee for their services. Based on several variables such as complexity, company size, etc., the process differs slightly from business to business.
Although the main goal is to prevent the company from going out of business, a resolution plan is developed and put into action. However, if this process is unsuccessful, the firm must file for dissolution. In other words, insolvency causes dissolution.
PROCESS OF LIQUIDATION
The following list outlines the typical steps involved in business liquidation
- When the business can’t afford to pay its debts, the board of directors may decide to dissolve the business.
- After that a liquidator gets appointed. A specialist accountant who is registered with ASIC can be a liquidator. The liquidator ought to be impartial toward the corporation.
- The liquidator posts a notice on the website for ASIC Published Notices. Anyone can search and peruse the insolvency and company deregistration notices on this public website.
- Then, the liquidation is announced to the creditors & they are informed of the liquidation and their rights in a report.
- Meeting of creditors. The liquidator may call a creditors’ meeting, or creditors themselves may seek one. The creditors’ approval of the liquidation’s planned course of action or their choice to select a new liquidator may be decided at this meeting.
The liquidation’s management goes through the either selling or shuttering the company: All this involves:
- Determine the company’s assets, then sell them.
- Getting in touch with creditors and receiving claims.
- delivering creditors updates on the situation.
- looking into potentially illegal or improper transactions.
- paying creditor payments (dividends).
- Completion of liquidation.
The firm is deregistered once ASIC is alerted.
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CLAIMS AFTER THE LIQUIDATION PROCESS
Following is the major order in which claims are resolved during the liquidation process:
- Secured: The company first pays its secured creditors, including the bank that provided the mortgage loan, and then reimburses all preferential secured creditors, including employees and landlords. Finally, the company pays the insolvency attorney hired to handle the liquidation.
- Suppliers, HMRC, contractors, holders of debentures, credit card firms, and other lenders or creditors without a guarantee of repayment are next in line.
- Stakeholders: Shareholders, investors, and owners are then given a share of the remaining funds.
DIFFERENT TYPES OF LIQUIDATIONS
Dissolution is the destination, yet it can be compelled or chosen. The grouping is as follows
- Compulsory or Forced Liquidation
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- In such a situation, the creditors ask the court to dissolve the company. Creditors no longer have faith in the company’s ability to make payments.
- Members voluntarily Liquidation.
- Dissolutions take place voluntarily when a corporation is financially stable and able to settle all of its obligations. Sometimes the proprietors of a firm decide to dissolve it after the original goal for its formation has been achieved. As an alternative, business owners can be moved, or the company might go through a restructure.
- Liquidation of Creditors voluntarily.
- The corporation becomes insolvent in this situation, and the directors or owners start this process to prevent court involvement or forced dissolution. In other words, the company files bankruptcy before its creditors may take legal action against it.
CONSEQUENCES
When the dissolution process is finished, the company’s name is deleted from the registry of companies (ROC). Many workers lose their employment when a company shuts down. Contractual employees, however, are also entitled to compensation for this loss.
Additionally, as soon as the dissolution procedure begins, all of the owners’ rights vanish and are given to the insolvency practitioner. As a result, the business is unable to dispose of properties or assets anyway they like. All such judgments are made by the insolvency expert.
CAIIB NOV 2023 STUDY MATERIAL
For many years, candidates studying for the CAIIB Exam have relied on Learning Sessions to give them the most recent CAIIB study materials to aid in their preparation. You can rely on their goodwill and benefit from the CAIIB Video Classes, which have the following features:
- Our bundle includes video classes for ABM, BFM, and elective papers.
- There are both recorded and live video classes available that follow the most recent curriculum. The IIBF’s most recent prescribed syllabus for the CAIIB Exams was followed in the production of the video lectures.
- There are mock tests for every CAIIB 2023 subject.
- The lectures also address CAIIB Case Studies.
- For video lectures, either English or English mixed with Hindi is used.
- In addition to video lectures, CAIIB exam notes are available in Epdf format on our apps
- We also cover memory recall questions from prior CAIIB exams in our study materials.
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