The big difference of a solvent liquidation of a company is the fact that the creditors are often repaid in full amounts since the company is still solvent as opposed to the insolvent process wherein creditors will usually receive little if any. Moreover, there would be a Declaration of Solvency that should be signed by the majority of directors as proof that the company is indeed undertaking such a decision to close it down. Within 5 weeks’ time, a resolution must be passed by the shareholders to wind-up the company and then appoint a licensed liquidator to take on the liquidation process.
The process of liquidation of the company has an effect both on the business firm itself and its directors. The company’s unsecured assets will be controlled by the liquidator who is responsible to sell them and pay the creditors. Once the liquidation has been completed, the name of the company will be removed from the Office Register. As for the directors’ part, they will be required to accomplish a written form that testifies their agreement to such a decision. Moreover, they will be obligated to provide assistance to the liquidator in locating records and assets of the company and answer all the queries pertaining to the company and its business operations. Otherwise, penalties and legal sanctions will apply.