The Dissolution Decision and Appointing a Liquidator
Liquidation begins with a formal decision by partners or shareholders to dissolve the company, whether voluntary because the company's purpose has been fulfilled, or resulting from financial distress requiring liquidation under the Bankruptcy Law.
The appointed liquidator inventories the company's assets and obligations, settling creditors in the order set by law, before distributing any remaining surplus to partners according to their shares.
Regulatory Basis
Voluntary liquidation falls under the Companies Law and its procedures regarding company dissolution, while liquidation resulting from financial distress falls under the Bankruptcy Law.
Practical Liquidation Steps
The process begins with a formal decision by partners to dissolve the company, followed by appointing a liquidator who inventories existing assets and obligations.
After settling creditors and distributing any surplus to partners, strike-off procedures are completed with the Ministry of Commerce to formally end the company's regulatory existence.
Who Needs This Process
Partners agreeing to end company activity after fulfilling its purpose or for other commercial reasons.
A financially distressed company that needs organized liquidation under the Bankruptcy Law.
We help partners and creditors alike under our liquidation and company dissolution service, and connect that with a parallel review under our bankruptcy, insolvency and restructuring service when liquidation results from financial distress rather than a voluntary decision.
Common Questions
How long does liquidating a company typically take?
It typically takes several months due to the statutory notice period allowing creditors to submit claims.
What happens if a creditor appears after liquidation is closed?
This situation needs a separate regulatory assessment depending on the timing the claim appeared and the reason it wasn't submitted within the original period.
Practical Takeaway
Stopping business activity without completing formal liquidation procedures leaves the company legally existing with ongoing obligations despite its actual cessation.
Distributing company assets to partners before confirming all creditors are settled may expose partners to a later claim that could be costly.