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A business with a global footprint can fail for various reasons. When this happens, the directors or creditors may decide to liquidate the business, any directors who have attended local networking groups will recognise this as the best course of action and will more than likely have an array of contacts willing to assist during the process. In the UK, a business can liquidate either voluntarily or involuntarily. Here is a detailed look at these two types of liquidation:
According to the UK's Companies house, a global business that opts to wind up will cease to operate and its assets sold to pay off existing debts (if any). This winding-up process can be either member or creditor-led. Members can initiate the winding up process if they are no longer interested in running the business and there are no viable successors. In this case, the directors are required to download and fill a "Declaration of solvency" form. After this, they should call for an AGM at least five weeks after beginning winding up process to pass voluntary liquidation resolution. This resolution should be published in The Gazette within 14 days followed by the appointment of an authorized insolvency practitioner. Finally, directors should submit Declaration of solvency form to the Companies House. Take note this form should have the signatures of the majority of directors in the business liquidating.
In a creditor-led voluntary winding-up, at least 75% of shareholders must agree to pass a "winding-up resolution." If this resolution passes, an authorized insolvency practitioner is appointed to oversee the liquidation process as well as submit the "winding-up resolution" to the Companies House within 15 days. Moreover, the same resolution should be published in The Gazette.
Compulsory winding-up occurs when a business cannot pay its creditors forcing them to seek legal redress in court. After a court receives a "winding-up petition," a hearing date is set when the business being forced to wind up can oppose the petition. It is the duty of the petitioner to serve the company to be wound up with a copy of the "winding-up petition" as well as publish it in the London Gazette. If a petitioner succeeds in acquiring a winding-up order, an Official Receiver is appointed to take charge of the liquidation process. Nevertheless, company creditors and contributories could appoint their own insolvency liquidator. Nevertheless, unsecured creditors are paid on a pari passu basis while dividends are paid on a pro rata basis.
An international business can wind up its operations via voluntarily or compulsory liquidation. Voluntary winding-up is usually amicable with all parties involved agreeing on a winding-up resolution out-of-court. The opposite is true during compulsory liquidation.