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Compulsory liquidation |
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Compulsory liquidationLiquidation of a company brought about by a court order, usually as the result of a petition by an unpaid creditor.Similar MatchesInvoluntary liquidation preferenceInvoluntary liquidation preferenceA premium that must be paid to preferred or preference stockholders if the issuer of the stock is forced into involuntary liquidation. LiquidationLiquidationWhen a company's debts and other liabilities exceed its assets, it is technically insolvent. If the company's directors are unable to shore up its finance by, for example, raising new equity or debt finance, one of its creditors may appoint a receiver to the company. The receiver's job is to take over the running of the company, doing whatever he thinks best to help the appointing creditor get its money back. This may result in the company being sold as a going concern or, it may result in the company going into liquidation.When a company goes into liquidation, the receiver will sell its assets as best he can and distribute the cash proceeds in a strict order. Ordinary shareholders of the company come very low down the pecking order, behind trade creditors, but they may eventually recover some or all of their investment. The process of liquidation can last several years.For CGT purposes, a notification by the Stock Exchange that a company's shares have 'negligible value' means that shareholders of the company can establish losses and set them off against gains on other investments. Liquidation valueLiquidation valueNet amount that could be realized by selling the assets of a firm after paying the debt. Voluntary liquidationVoluntary liquidationThe liquidation of a company approved by its shareholders. |
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