Question

(b) Describe five ways in which a liquidator could distribute the assets of a company in a compulsory winding up.

Answer 1

Answer 1) Liquidation is winding up of a company by the enforcement of la that is when companies go bankrupt, so let’s talk about 5 ways how liquidator liquidates the assets of the companies:

1) Sale of Assets and payment to creditor: If the company is suffering from losses or have filed for a bankruptcy then in such cases the Asset of the company are be sold by the liquidator or to the creditor in the lieu of payment that needs to be done.

2) Distribution of Asset amongst Shareholders: The asset of company is given to its shareholders as per their capital ration or stake in the firm; it is only given when the assets are left after paying all the expenses.

3) Sale of Assets to government: When any company is liquidating, if there is any government tax or government fine left then in such cases the liquidator liquidates the assets of the company in the name of the government.

4) Bidding: If a company goes bankrupt then in such case bidding of assets are done and the highest bidder gets the assets and then this money is paid for outstanding expense. All this process is carried out by the liquidator.

5) Rental Basis: The liquidator rent the assets of company for some amount of years to the people interested in it or sometimes the companies interested in taking whole of the assets of company and pay their losses.