Effects of liquidation on the liquidating corporation
Property which is held by the company on trust for third parties will not form part of the company's assets available to pay creditors.Before the claims are met, secured creditors are entitled to enforce their claims against the assets of the company to the extent that they are subject to a valid security interest.
Where a voluntary winding-up of a company has begun, a compulsory liquidation order is still possible, but the petitioning contributory would need to satisfy the court that a voluntary liquidation would prejudice the contributors.
It can take account of personal relationships of mutual trust and confidence in small parties, particularly, for example, where there is a breach of an understanding that all of the members may participate in the business, Upon hearing the application, the court may either dismiss the petition, or make the order for winding-up.
The court may dismiss the application if the petitioner unreasonably refrains from an alternative course of action.
75 percent of the company's shareholders must agree to liquidate for liquidation proceedings to advance.
If the company is solvent, and the members have made a statutory declaration of solvency, the liquidation will proceed as a members' voluntary winding-up.