A solvent firm’s liquidation by a resolution passed for voluntary shutdown of the business by its shareholders who also typically choose and appoint the liquidator. It requires a statutory solvency declaration by the firm’s board of directors as it is not an insolvency procedure. It is commonly a criminal offense to make this declaration without solid justification. A qualified liquidator must be appointed after the resolution even if a court is not involved. If the firm’s assets are insufficient to cover its debts, unsecured creditors can take charge of the liquidation process, which is then called a compulsory liquidation. Also known as members’ voluntary winding up, or just voluntary winding up.
What is MEMBERS’ VOLUNTARY LIQUIDATION?
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