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Insolvent Liquidation

The term covers a process during which a company is liquidated, or in other words the assets and any property owned by the company is sold or redistributed. There are two types of liquidation: compulsory, when it is initiated by a creditor (starting a petition) or voluntary when shareholders of the certain company wind-up all the existing company affairs and finally the dissolve the company. In case of insolvent liquidation the process is most often started by a creditor who tries to recover the lent amount this way. Insolvent liquidation occurs when a company becomes incapable of repaying the accumulated debts, or simply there is not enough income to cover the monthly debt payments and so either the board of directors or the creditors will initiate a petition to start the liquidation process. Insolvent liquidation also means that the company's assets are insufficient to repay all the debts and other expenses of the liquidation process, and in this case it does not matter who petitioned for the process.