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Winding of Company/LLP
Winding up a company or a Limited Liability Partnership (LLP) refers to the process of closing down the business and liquidating its assets to pay off creditors and distribute the remaining assets among the partners or shareholders.
Winding Of Company/LLP
Winding up a company or a Limited Liability Partnership (LLP) refers to the process of closing down the business and liquidating its assets to pay off creditors and distribute the remaining assets among the partners or shareholders. Below is an overview of the content and steps involved in the winding-up process for both a company and an LLP:
1. Types of Winding Up:
- Voluntary Winding Up: The members or partners of the company or LLP pass a resolution to wind up the business voluntarily. It can be either Members’ Voluntary Winding Up (for solvent businesses) or Creditors’ Voluntary Winding Up (for insolvent businesses).
- Compulsory Winding Up: The winding-up process is initiated by an order from the court due to non-compliance, insolvency, or other legal reasons.
2. Appointment of Liquidator:
- In a voluntary winding-up, the members or partners appoint a liquidator to oversee the winding-up process and liquidate the assets. In a compulsory winding-up, the court appoints an official liquidator.
3. Notice to Creditors and Public Announcement:
- The liquidator is required to notify creditors and the public about the winding-up process and invite creditors to submit their claims.
4. Verification of Claims:
- The liquidator verifies and prioritizes the claims of creditors and settles them using the proceeds from the sale of assets.
5. Asset Liquidation:
- The liquidator collects and sells the company’s or LLP’s assets to generate funds for settling debts and liabilities.
6. Payment of Creditors and Partners/Shareholders:
- After settling all outstanding debts and expenses, the remaining funds are distributed among the partners or shareholders based on their entitlement.
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