Judicial vs. Nonjudicial Liquidation

We often hear about business liquidation and the subsequent processes involved thereafter. However, businesses can undergo different types of liquidation depending on the circumstances that had led up to it occurring, these are known as judicial and nonjudicial liquidation.

Generally, the umbrella term of liquidation encompasses the act of asset collection, debt payment, and disseminating leftover property to shareholders.

Similar in vein to our previous piece regarding why business liquidation should be left in the hands of experts, today’s piece will give you a clearer understanding behind the different liquidation types and the efforts involved from all pertinent parties:

Judicial Liquidation

This form of liquidation is enacted by shareholders, creditors, or the state, and can be regularly attributed to a director that was unable to competently manage a corporation, improper conduct, or not respecting corporate assets.

 

Because of these reasons, a court cannot confide in the management’s capability of properly carrying out a liquidation, which is why in most judicial liquations a liquidator is appointed by the court. The liquidator’s main responsibility is to seize control over the corporation’s assets and allocate them to creditors and shareholders.

 

Nonjudicial Liquidation

Liquidation of this type is carried out under voluntary or organisational action and is enacted and seen through to completion by either the directors or shareholders. The protocol involved in nonjudicial liquidation involves completing contracts, notification for creditors to submit their claims, collecting assets, payment of creditors, and any outstanding payments are to be distributed amongst shareholders according to their priorities.

 

Liquidation with a Track Record

For over 85 years, our team at Infinity Asset Solutions have been providing comprehensive retail and business liquidation services across a variety of markets. From businesses operating in textiles to biotech, we have the portfolio of experience that can provide holistic asset solutions, no matter the scale or business type.

 

We are known for hosting successful auctions for industrial and commercial sectors so that they can liquidate or reduce their assets as effectively as possible. Contact one of our representatives to understand how we can market and sell your assets!