What is the difference between dissolving and liquidating a company
With an individual, the discharge gives the debtor a fresh start, enabling him to continue his or her life more comfortably.With companies, it works differently: Once the assets are liquidated and the proceeds are distributed, the company is dissolved permanently, at which time it ceases to exist.The laws of the state of incorporation govern the dissolution process, so it’s important to remember that the process described below will differ if the business is incorporated in another state.Corporations typically choose to do a corporate dissolution when they don’t need bankruptcy protection (and prefer to avoid filing bankruptcy) but want to have the corporation formally wound down.
It involves a certain number of formal steps and the overall process can take months to complete.
In the event of an Indian company registered under the Act becoming insolvent, it is winding up that is applicable.
These provisions apply equally to a listed company, a public limited company as well as a private limited company.
Sometimes a bankruptcy filing is needed, either a Chapter 11 reorganization (perhaps to complete a going-concern sale) or a Chapter 7 liquidation bankruptcy (in which a trustee will be appointed to liquidate the business).
In other cases, an assignment for the benefit of creditors might be a good choice.