What Are the Different Types of Corporate Liquidation
Corporate liquidation refers to the process of wrapping up a company’s business operations and distributing its assets to its creditors and shareholders. During liquidation, corporations sell their assets, including property, equipment, and inventory, to turn them into cash for paying off debts. Any remaining proceeds from liquidation sales are usually distributed to the company’s shareholders.

Liquidation typically occurs when a company can no longer pay its debts or continue operating profitably. Corporate liquidation is often seen as a last resort for struggling companies, but it can also be a strategic decision that allows business owners to manage their financial goals and obligations. If you’re considering ceasing your business operations due to insolvency, retirement, or some other factor, you should contact an experienced corporate liquidation lawyer in your area as soon as possible. 

At Bradford Law Offices, our founding attorney, Danny Bradford, has represented more than 4,000 individual clients in a variety of bankruptcy cases and other legal matters since 1996. Mr. Bradford and his team are prepared to support you every step of the way as you seek a fresh start, whether or not that involves corporate liquidation. So, don’t struggle alone under the burden of financial debt. Contact us today by calling (919) 758-8879 or filling out our online contact form to get the help you need.

Voluntary vs. Compulsory Corporate Liquidations

Corporate liquidation for an insolvent business can take one of two distinct forms: compulsory liquidation or voluntary liquidation.

Compulsory Corporate Liquidation

When creditors or lenders do not see a path forward that results in them recouping the money they have lent a company, they can petition the courts to order the compulsory liquidation of that company. If a court approves this type of petition, a court-appointed liquidator will assume control of the company’s operations and proceed in the best interests of creditors, lenders, and, eventually, shareholders. 

If an insolvent company cannot pay its outstanding financial obligations, even a total liquidation of its assets and securities might not be enough to repay its debts in full. In that case, creditors might receive only a portion of what they are owed, and shareholders might receive nothing at all.

Voluntary Corporate Liquidation

Insolvent companies might undergo voluntary liquidation when owners become aware of their insolvency and inability to repay creditors. Some owners of still-solvent companies might also choose voluntary liquidation if they want to retire, start new businesses, or resolve disputes with partners.

Instead of waiting for lenders to file petitions and go through the courts, certain business owners choose this type of liquidation as a proactive measure to pay off outstanding debts and redistribute remaining assets and profits to shareholders.

Chapter 7 Bankruptcy Liquidation

One of the most common reasons for corporate liquidation is Chapter 7 bankruptcy. Chapter 7 bankruptcy is available to both businesses and individuals in the U.S. When you file for Chapter 7 bankruptcy on behalf of your company, your ultimate goal is to discharge outstanding business debts and avoid significant financial burdens later on.

Liquidation is standard practice for businesses filing for Chapter 7 bankruptcy. Businesses do not enjoy many of the same protections individuals do when declaring bankruptcy, namely the ability to exempt certain assets from the liquidation process. Almost all assets for businesses undergoing Chapter 7 are subject to corporate liquidation.

What Are the Different Types of Corporate Liquidation 2How a Corporate Liquidation Lawyer Can Help

A business bankruptcy lawyer can provide valuable assistance if you are considering Chapter 7 bankruptcy or corporate liquidation as a business owner. When you work with the experienced team at Bradford Law Offices, you can count on us to:

  • Provide legal guidance on the implications and requirements of bankruptcy or liquidation
  • Explain the potential consequences of liquidation for your personal assets and credit rating
  • Prepare and file the necessary paperwork for your bankruptcy petition or corporate liquidation and represent you in court if necessary
  • Negotiate with creditors on your behalf to reach a favorable outcome and protect your interests
  • Help you explore alternative options, such as restructuring or negotiating with creditors outside of corporate bankruptcy or liquidation

Contact a North Carolina Corporate Liquidation Attorney Today

At Bradford Law Offices, we can guide you through the process of filing for bankruptcy or liquidating your company’s assets. Our skills and experience have helped simplify the liquidation process for countless business owners for over two decades. Let us help you next. 

Contact our firm by phone at (919) 758-8879 or through our website today to learn more in an initial consultation session.


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Written By: Danny Bradford Last Updated: November 22, 2023